New Delhi: State-owned Indian Oil Corporation ,IOC, Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited ,BPCL) recorded a combined loss of Rs 18,480 crore on maintaining the prices of petrol and diesel despite the increase in cost.
According to stock exchange filings by the three fuel retailers, the loss was on account of decline in marketing margins on petrol, diesel and domestic LPG.
This erased profits from record refining margins. IOC, HPCL and BPCL, which have to revise the prices of petrol and diesel daily to match the cost, have not changed rates for four months despite the rise in international oil prices.
They have not changed the LPG rates of LPG according to the cost. IOC on July 29 reported a net loss of Rs 1,995.3 crore in the April-June quarter. On Saturday, HPCL reported its highest ever quarterly loss of Rs 10,196.94 crore and BPCL reported a loss of Rs 6,290.8 crore.
The combined loss of Rs 18,480.27 crore is the highest ever for any quarter when petrol and diesel prices were controlled and the government subsidized the three retailers.
During April-June, IOC, BPCL and HPCL did not revise the prices of petrol and diesel in line with the rising cost, to help the government contain inflation which was above 7 per cent.
Crude oil imports by India during the quarter averaged USD 109 per barrel, but the retail pump rates were aligned with the cost of around USD 85-86 per barrel.
While the government has said oil companies are free to revise retail prices, the three state-owned firms have not explained the reasons for freezing rates from April 6.
Usually, oil companies calculate refinery gate price based on import parity rates. But if the marketing division sells it at prices below the import parity, the loss is recorded.
State fuel retailers must align rates with an international cost every day. But they have kept prices stable from time to time before important elections.
IOC, BPCL and HPCL last year stopped revising rates ahead of assembly elections in states like Uttar Pradesh. That 137-day freeze ended in late March and prices were hiked by Rs 10 per liter before another round of freeze was implemented in early April.
This is despite international oil prices reaching multi-year highs due to supply concerns following Russia’s invasion of Ukraine.
The government in May cut excise duty on petrol and diesel, which were passed on to consumers instead of being used, to offset mounting losses on the two fuel sales.
The current moratorium on petrol and diesel prices is now 123 days old, excluding the reduction due to reduction in excise duty.
Last month, ICICI Securities said in a report that IOC, BPCL and HPCL sold petrol and diesel at a loss of Rs 12-14 per litre, completely impacting the strong refining performance during the quarter.
According to stock exchange filings by the three fuel retailers, the loss was on account of decline in marketing margins on petrol, diesel and domestic LPG.
This erased profits from record refining margins. IOC, HPCL and BPCL, which have to revise the prices of petrol and diesel daily to match the cost, have not changed rates for four months despite the rise in international oil prices.
They have not changed the LPG rates of LPG according to the cost. IOC on July 29 reported a net loss of Rs 1,995.3 crore in the April-June quarter. On Saturday, HPCL reported its highest ever quarterly loss of Rs 10,196.94 crore and BPCL reported a loss of Rs 6,290.8 crore.
The combined loss of Rs 18,480.27 crore is the highest ever for any quarter when petrol and diesel prices were controlled and the government subsidized the three retailers.
During April-June, IOC, BPCL and HPCL did not revise the prices of petrol and diesel in line with the rising cost, to help the government contain inflation which was above 7 per cent.
Crude oil imports by India during the quarter averaged USD 109 per barrel, but the retail pump rates were aligned with the cost of around USD 85-86 per barrel.
While the government has said oil companies are free to revise retail prices, the three state-owned firms have not explained the reasons for freezing rates from April 6.
Usually, oil companies calculate refinery gate price based on import parity rates. But if the marketing division sells it at prices below the import parity, the loss is recorded.
State fuel retailers must align rates with an international cost every day. But they have kept prices stable from time to time before important elections.
IOC, BPCL and HPCL last year stopped revising rates ahead of assembly elections in states like Uttar Pradesh. That 137-day freeze ended in late March and prices were hiked by Rs 10 per liter before another round of freeze was implemented in early April.
This is despite international oil prices reaching multi-year highs due to supply concerns following Russia’s invasion of Ukraine.
The government in May cut excise duty on petrol and diesel, which were passed on to consumers instead of being used, to offset mounting losses on the two fuel sales.
The current moratorium on petrol and diesel prices is now 123 days old, excluding the reduction due to reduction in excise duty.
Last month, ICICI Securities said in a report that IOC, BPCL and HPCL sold petrol and diesel at a loss of Rs 12-14 per litre, completely impacting the strong refining performance during the quarter.