The three biggest state-run retailers, which together supply more than 90 per cent of India’s petroleum fuels, have suffered the worst quarterly losses in years by absorbing record international crude prices. While the handout could ease their pain, it would add pressure to the government’s coffers that are already strained by tax cuts on fuels and a higher fertilizer subsidy to tackle mounting inflationary pressures.
Shares of state-run retailers gained, with Hindustan Petroleum Corp. rising 1.7 per cent, Bharat Petroleum Corp. adding 1.2 per cent and Indian Oil closing 0.1 per cent higher, after falling as much as 0.8 per cent earlier in the session.
The government had earmarked oil subsidy at 58 billion rupees for the fiscal year ending March, while fertilizer subsidy was pegged at 1.05 trillion rupees.
These refining-cum-fuel retailing companies, which use more than 85 per cent of imported oil, benchmarked the fuels they produce to international prices. Those shot up after a global recovery in demand coincided with reduced fuel-making capacity in the US and fewer exports from Russia.
State oil companies are obligated to buy crude at international prices and sell locally in a price-sensitive market, while private players such as Reliance Industries Ltd. have the flexibility to tap on stronger fuel export markets.
India imports about half of its liquefied petroleum gas, generally used as cooking fuel. The price of Saudi contract price, the import benchmark for LPG in India, has increased 303 per cent in the past two years, while the retail price in Delhi was increased by 28 per cent, India’s Oil Minister Hardeep Singh Puri said on Sept. 9.
Representatives for India’s finance ministry and oil ministry declined to comment.
The companies have also been holding down pump prices of gasoline and diesel since early April to curb accelerating inflation.
The oil companies will require some intervention either through price increases or government compensation to cover sustained losses, Bharat Petroleum Chairman Arun Kumar Singh said last month.
To read the full story, Subscribe Now at just Rs 249 a month
Already a subscriber? Log in
Subscribe To BS Premium
₹249
Renews automatically
₹1699₹1999
Opt for auto renewal and save Rs. 300 Renews automatically
₹1999
What you get on BS Premium?
-
Unlock 30+ premium stories daily hand-picked by our editors, across devices on browser and app.
-
Pick your 5 favourite companies, get a daily email with all news updates on them.
Full access to our intuitive epaper - clip, save, share articles from any device; newspaper archives from 2006.
Preferential invites to Business Standard events.
Curated newsletters on markets, personal finance, policy & politics, start-ups, technology, and more.
Need More Information - write to us at assist@bsmail.in