Why should state-owned companies pay the price for the government’s populist policies is the question that oil marketers IOC, HPCL and BPCL are asking. They have indicated they can no longer bear that burden—likely to be around Rs1.8 trillion this year. Hence, their widely reported “plans” to freeze new LPG connections, curtail its supplies, and of diesel in rural regions, while pushing premium fuels in cities.
The companies’ business viability is getting badly hit with under-recoveries from their sale of underpriced petrol, diesel and LPG even as their costs on account of crude oil have been skyrocketing. The more they sell, the more they lose—around Rs300 on every LPG cylinder that they sell, for instance.
Will the government now order sellers not to resort to their proposed rationing? It will have a tough time checking what happens at various outlets across the country. Time it acted on the home truth—its populism is misplaced. Consumers prefer free market supply over price control-bred shortages.