State-run oil marketing companies are facing a major hit to their finances, Union petroleum and natural gas minister Hardeep Singh Puri flagged on Tuesday. Puri 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.He further warned that if current crude price trends persist while retail rates remain unchanged, OMCs could face losses of around Rs 1 lakh crore in a single quarter, an amount large enough to erase annual sector profits.“These losses in one quarter are enough to wipe out profits that oil companies earn in the entire year,” Puri said, highlighting the pressure on Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL).
For the current quarter, the combined under-recovery on petrol, diesel and LPG stands at about Rs 1.98 lakh crore, with actual losses estimated at close to Rs 1 lakh crore. At present, OMCs are absorbing losses of Rs 14 per litre on petrol, Rs 42 per litre on diesel, and Rs 674 per litre on LPG.The government has continued to shield Indian consumers from rising global crude prices, which crossed the $100 per barrel mark long back and even touched $126 at one point. While the country has sufficient inventories to avoid any supply shock, the cost of keeping retail fuel prices unchanged is now mounting heavily on state-owned fuel retailers.Despite a nearly 50% rise in crude oil input costs, retail fuel prices have remained unchanged for four years. Petrol continues to be priced at Rs 94.77 per litre and diesel at Rs 87.67 per litre.Price freeze adds long-term pressure on balance sheetsPuri acknowledged that the decision to keep retail prices unchanged has come at a significant cost to state fuel retailers, even as global crude prices remain elevated.“My oil companies are losing Rs 1,000 crore a day,” he said, adding that the growing losses raise concerns about how long OMCs can continue absorbing the burden.Despite the financial strain, oil companies have ensured uninterrupted fuel supply even during geopolitical disruptions in West Asia. The minister said India has avoided shortages or rationing, unlike several global markets.“There are no shortages anywhere,” he said, adding that petrol, diesel and LPG availability has remained steady across the country.OMCs balancing demand growth with rising subsidy loadFuel demand trends have remained stable, with petrol consumption rising by around 6%, while LPG demand has eased to about 75,000 tonnes per day from nearly 90,000 tonnes earlier.Puri said refiners have increased LPG production and supplemented supply through kerosene and biofuels, but the cost burden of maintaining subsidised pricing continues to fall on OMC balance sheets.“We are no longer import-dependent on our refineries, and that is where our strength has come from,” he said, while acknowledging the fiscal stress on companies.Long-term restructuring neededThe minister said that the government is reviewing strategic energy storage and supply systems in light of current global volatility, adding that future planning will need to account for sustained price pressures.India currently imports about 88% of its crude oil requirements, while a significant share of LPG previously moved through the Strait of Hormuz, exposing OMCs to global price shocks.Despite the strain, India plans to expand refining capacity to 320 million metric tonnes per annum by 2030 from around 260 million currently, alongside increased domestic exploration efforts.Puri said the long-term strategy is aimed at strengthening energy security, even as state-run oil companies continue to bear heavy short-term financial losses from maintaining stable retail fuel prices.
