Oil firms see 20% dip in sales since the June 4 increase.
The government’s decision to raise fuel prices in June has scuttled the oil companies’ plans to reduce their losses from retail fuel sales as consumers are buying less of premium fuels, which is more expensive than normal fuels.
The oil marketing companies, Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL), which were “pushing” premium fuels to reduce losses from normal petrol and diesel, have seen sales of the more expensive premium fuels fall by around 20 per cent since the prices of petrol and diesel were increased on June 4.
| LOSING STEAM Prices of normal and branded petrol in Delhi (Rs/litre) | ||
| Brand | Branded petrol | Normal petrol |
| Xtra Premium (IOC) | 55 | 51 |
| Speed (BPCL) | 55 | 51 |
| Power (HPCL) | 55 | 51 |
“We have stopped pushing premium fuels. We are giving the consumer a choice and they are choosing normal fuels,” said a senior official with IOC, which had asked its dealers in metros to sell only premium fuels a few months ago.
Premium fuels are around Rs 4-5 more expensive than normal fuels. IOC, BPCL and HPCL are incurring a loss of Rs 28 for every litre of diesel they sell and around Rs 17 for every litre of petrol. By selling the more expensive premium fuels they could reduce their loses on petrol and diesel by Rs 4-5 per litre.
The share of premium fuels in the total sales of these companies has fallen to around 27 per cent from around 35 per cent before the fuel price increase on June 4. Premium fuels are a mixture of normal fuels and additives which improves the performance of a vehicle. Premium fuel prices are not controlled by the government like prices of basic petrol and diesel.
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The dip in sales of premium fuels comes even as the demand for petrol and diesel continues to rise by around 12-13 per cent every month. The country consumed around 10.7 million tonne of diesel in June and around 2.2 million tonne of petrol.
“We were hoping demand for fuels would fall after the price hike. That has not happened,” said S Radhakrishnan, marketing director of BPCL, which meets a quarter of the country’s fuel demand.
The retail losses had resulted in BPCL and HPCL making losses in the first quarter of the current financial year and IOC’s net profit falling 71 per cent.
The retail losses are resulting in borrowings of these companies rising. IOC’s borrowings currently stand at Rs 42,500 crore, and it is borrowing around Rs 7,500 crore every month. Around 70 per cent of this is for short-term working capital requirement.