State-owned oil marketing companies (OMCs) have incurred losses exceeding Rs 1 lakh crore over the past 10 weeks as they continued to protect Indian consumers from soaring global fuel prices triggered by the ongoing Middle East conflict. The three state-run fuel retailers—Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL)—are currently suffering combined under-recoveries of approximately Rs 1,600 crore to Rs 1,700 crore per day, according to sources cited by news agency PTI.
These losses come despite a sharp rise in global crude oil prices. Petrol and diesel retail prices in India have remained unchanged at nearly two-year-old levels of Rs 94.77 per litre and Rs 87.67 per litre, respectively. Domestic LPG prices were increased by Rs 60 per cylinder in March but are still below actual cost levels.
OMCs Under Financial Strain
The losses stem from the gap between the actual cost of fuel and the retail selling price, known as under-recovery. Sources said the OMCs have ensured uninterrupted supply of petrol, diesel, and LPG despite disruptions in imports caused by the Middle East conflict, which affected nearly 40% of India’s crude oil imports, 90% of LPG imports, and 65% of natural gas imports.
“Financially strong OMCs are critical for India's energy security, supply continuity, infrastructure expansion, and economic stability,” a source told PTI. The report indicated that the firms may now require higher working capital borrowings to continue operations if elevated crude prices persist for a longer period. “If elevated crude prices persist for an extended period, OMCs may require higher working capital borrowings and calibrated reprioritisation of some capex timelines,” a source added.
Fuel Price Hike May Become Inevitable
Sources quoted by PTI stated that a decision on increasing petrol and diesel prices has now become a political call for the government. “There is no doubt that a fuel price hike has become inevitable, but the timing and quantum of increase have to be decided by the government,” a source said.
The Centre has already reduced excise duties to absorb part of the burden. Excise duty on petrol was cut to Rs 3 per litre from Rs 13, while diesel excise duty was reduced to zero from Rs 10 per litre, resulting in a monthly revenue hit of around Rs 14,000 crore for the government. Despite the mounting pressure, strategic investments in refining expansion, biofuels, ethanol blending, and energy security infrastructure are expected to continue with government backing.
