Business News/ Industry / Energy/  Auto fuel prices may not fall despite 30% decline in crude

NEW DELHI : State-run oil companies may not immediately lift the six-month long freeze on daily pricing of automobile fuel rates despite nearly 30% plunge in average international prices of petrol and diesel from the June peak as they work towards recovering their past revenue losses, four people said.

International oil prices have fallen sharply over the past four weeks; this has resulted in reductions in the prices of commercial liquefied petroleum gas, aviation turbine fuel (ATF) and taxes on windfall gains. But public sector oil marketing companies (OMCs) are still bleeding, and are neither in a position to cut prices of petrol and diesel immediately nor return to the system of daily changes in pump prices of the auto fuels as the international oil market is volatile, the people aware of the development said requesting anonymity.

According to official data, India’s average crude oil import price fell by about 22% to $90.71 a barrel in September compared the June peak of $116.01. Product prices fell even sharply. While average petrol price plunged 37% from $148.82 a barrel in June to $93.78 in September, in case of diesel the fall is 28% to $123.36 per barrel in September compared to $170.92 a barrel in June.

One of the persons mentioned above said state-run OMCs —Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL)—are making about 3-4 per litre margin on sale of petrol, but that the gains in diesel are still negligible. “It is estimated that in the second quarter of current fiscal year, the three OMCs would together post a net loss similar to that of the previous quarter. Under these circumstances, a status quo is expected for pricing of petrol and diesel."

“The government will review financial conditions of OMCs and issue necessary directives accordingly," a second person working in an economic ministry said. 

Even as many countries are facing energy supply disruptions, the government, though public sector OMCs, has not only ensured uninterrupted supply of petrol and diesel but also shielded consumers from fuel rate volatility, he added. India is world’s third largest crude oil consumer after the US and China and imports 85% of crude it processes.

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Updated: 04 Oct 2022, 07:05 AM IST
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