Even after factoring in the Rs 3 per litre hike in petrol and diesel prices, the Oil Marketing Companies to incur losses of around Rs 500 crore per day with anticipation of few more price hikes soon. Petrol price was hiked to Rs 97.77 per litre from Rs 94.77 in the national capital. Diesel now costs Rs 90.67 as against Rs 89.67 per litre previously. The increase has pushed fuel prices above Rs 100 per litre in several cities like Mumbai, Kolkata, and Chennai.
Prashant Vasisht, Senior Vice President and Co-Group Head, Corporate Ratings. ICRA Ltd. said, “The modest hike in retail price of Rs. 3/liter for petrol and diesel provides limited relief to the oil marketing companies.”
“ICRA estimates that at crude price of $105-110/barrel and considering past 10-year average crack spreads of auto fuels, oil marketing companies incur a loss of about Rs 500 crore daily on the sale of auto fuels and domestic LPG, even after factoring the fuel price hike. Accordingly the oil marketing companies would need to relook at the retail prices in case elevated crude oil prices persist.”
On Tuesday, Union petroleum and natural gas minister Hardeep Singh Puri had said that oil marketing companies (OMCs) are collectively losing around Rs 1,000 crore every day as they continue to sell petrol, diesel and LPG below cost. He added that the cumulative under-recoveries have risen to nearly Rs 1.98 lakh crore.
Also Read: Petrol, Diesel Prices Hiked By Rs 3 Per Litre: Check New Prices In Your City
Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities said, “The Rs 3 hike in petrol and diesel prices reflects the pressure of elevated global crude oil prices and rising import costs on the government’s fiscal position. While the increase may temporarily add to inflation concerns and impact transportation and consumption costs, it also indicates the government’s focus on managing fuel subsidies and protecting forex reserves amid ongoing global uncertainty. In the longer term, such moves may further accelerate the push towards EV adoption and reduced dependence on imported fuel.”
Jyotivardhan Jaipuria, founder and managing director at Valentis Advisors, as reported by Business Standard said, “There could be more such hikes in the weeks ahead in case the war in West Asia continues. We expect more policy measures from the government in this backdrop. The markets will remain range-bound with a positive bias amid intermittent bouts of selling.”
Oil Companies to Lose Rs 500 Crore Daily Despite Fuel Price Increase, More Hikes Likely
