'No proposal before the govt': Centre rules out relief for state oil firms

State-run fuel retailers will not receive government financial backing for losses arising from the sale of petrol, diesel and aviation turbine fuel (ATF) below cost, with the Centre confirming that no such proposal is under consideration. The three public sector oil marketing companies: Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), are facing significant financial pressure after continuing a four-year freeze on petrol and diesel retail prices, despite a sharp increase in crude oil prices triggered by the Middle East conflict over the past two months. Along with losses on road fuels, these firms have also begun incurring losses on ATF sales since last month after only partially increasing prices.

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“There is no proposal before the government to support oil marketing companies (for their losses),” said Sujata Sharma, Joint Secretary in the Ministry of Petroleum and Natural Gas. Petrol and diesel prices have not been revised even though oil companies are facing under-recoveries of Rs 25-28 per litre. ATF prices for domestic airlines were raised by 25% last month, which represented only a fraction of the increase needed to match costs, and no hike was announced this month. However, fuel supplied to foreign airlines saw a price increase of more than 5%. Domestic LPG prices were revised upward by Rs 60 per 14.2-kg cylinder on March 7, but the increase still fell short of covering the full rise in input costs, leaving oil companies to bear losses. Although the government has previously compensated such LPG under-recoveries through subsidy support, no fresh relief is planned. Sharma said the government has chosen not to increase retail prices of petrol, diesel or domestic LPG despite supply disruptions linked to the war in the Middle East. Instead, price revisions have been restricted to bulk diesel and commercial LPG, which are used largely by industrial and commercial consumers. “Every effort has been made to protect the consumers (by not raising retail prices). Consumer interest has been kept in mind when deciding on the revision,” she said, adding that bulk diesel and commercial LPG account for only around 10% of fuel consumption. From May 1, ATF prices for international airlines were increased by $76.55 per kilolitre, or 5.33%, taking rates to $1,511.86 per kl. This followed the April 1 revision, when prices for foreign carriers had more than doubled to $1,435.31 per kl. Commercial LPG rates were also sharply revised, with the 19-kg cylinder used by hotels and restaurants rising by Rs 993 to a record Rs 3,071.50. Market-priced 5-kg LPG cylinders were raised from Rs 549 to Rs 810.50, narrowing the gap with the Rs 913 price of a standard 14.2-kg domestic cylinder. Industrial users of bulk diesel, including telecom tower operators, are now paying over Rs 149 per litre, up from around Rs 137, while retail diesel at petrol pumps remains priced at Rs 87.62 per litre. ATF prices for domestic airlines, however, remain unchanged at Rs 1,04,927.18 per kilolitre, with public sector oil firms absorbing the higher global fuel costs. Sharma said the approach adopted by oil marketing companies is intended to contain inflation while shielding consumers from the full impact of rising global energy prices.