Kamal Ghorui
India’s state-run oil marketing companies are absorbing losses of nearly Rs 30,000 crore every month to keep petrol, diesel and LPG prices unchanged despite the sharp surge in global energy prices triggered by the West Asia conflict, government officials and sources, cited by PTI said on Friday.The financial burden on Indian Oil Corporation, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd comes as crude oil prices climbed from about $70 per barrel two months ago to nearly $120 amid supply disruptions and rising shipping risks in the Strait of Hormuz.At a briefing on developments in West Asia, joint secretary in the ministry of petroleum and natural gas Sujata Sharma said the government had so far prioritised shielding consumers from higher fuel costs despite volatility in international markets. “It has been government’s endeavour to keep prices stable so far and that there is no price increase for consumers,” Sharma said. “This has hit finances of OMCs… monthly under-recoveries are of the order of Rs 30,000 crore.”She declined to say whether fuel prices would remain unchanged going forward. “As I said, the endeavour so far has been to see that there is no price increase,” she added.According to PTI sources, daily under-recoveries during April touched around Rs 18 per litre on petrol and Rs 25 per litre on diesel, translating into losses of roughly Rs 700-1,000 crore per day.The sources also said the prolonged pressure could affect the balance sheets and borrowing requirements of oil companies, although investments related to refining expansion, energy security, ethanol blending and transition fuels would continue with government backing.The crisis came after the February 28 strikes by the United States and Israel on Iran escalated tensions across West Asia, disrupting tanker movement across key route Strait of Hormuz and raising freight and insurance costs. India’s dependence on the region left nearly 40 per cent of its crude imports, 90 per cent of LPG imports and 65 per cent of natural gas supplies exposed to disruptions.Meanwhile, the Centre also reduced excise duties to cushion the impact. The special additional excise duty on petrol was cut from Rs 13 per litre to Rs 3, while duty on diesel was reduced from Rs 10 per litre to zero. Officials estimated that without these cuts, under-recoveries would have risen to nearly Rs 62,500 crore. “The government has taken a hit of Rs 14,000 crore a month in cutting the excise duty,” Sharma said.Officials said the combined impact of government intervention and oil company absorption helped India avoid the steep retail fuel price hikes witnessed globally. Petrol prices reportedly rose by about 34 per cent in Spain, 30 per cent in Japan, Italy and Israel, 27 per cent in Germany and 22 per cent in the United Kingdom during the same period.
