Political wink-and-nudge: OMCs took a hit on their margins even earlier

What Jaitley did on Thursday by asking them to absorb another one ruppe per litre was to increase that squeeze and make it formal

Even before Finance Minister Arun Jaitley’s announcement on Thursday that oil marketing companies will be asked to absorb another one rupee per litre, the margins of state-owned oil refineries were already under squeeze. What Jaitley did on Thursday was to increase that squeeze and make it formal.

From April 1 to October 1 this year, the difference in the petroleum products’ cost and freight (C&F) price for refineries and the price at which they were sold to dealers had already narrowed from Rs 4 to Rs 2 a litre for petrol and from Rs 4 to Rs 3 a litre