India’s top fuel retailers IOC, BPCL and HPCL lost Rs 19,000 cr in revenue due to fuel price freeze: Moody’s
By Team Newsable | First Published Mar 24, 2022, 8:01 PM ISTEven though prices of crude oil (raw material for producing fuel) averaged around $111 per barrel in the first three weeks of March compared to around $82 in early November, petrol and diesel prices remained unchanged between November 4, 2021, and March 21 in India.
Despite a massive rise in crude oil prices, India’s top fuel retailers including IOC, BPCL and HPCL kept the prices unchanged, and it cost them around Rs 19,000 crore in revenue between November and March, Moody’s Investors Service said on Thursday.
Even though prices of crude oil (raw material for producing fuel) averaged around $111 per barrel in the first three weeks of March compared to around $82 in early November, petrol and diesel prices remained unchanged between November 4, 2021, and March 21 in India.
Latest Videos
Notably, despite strong predictions that fuel prices will see a major hike after the Assembly elections results for five states were announced, OMCs have refrained from raising fuel prices.
Also read: Check Petrol and diesel prices in your city today, see rates here
State-owned Indian Oil Corporation (IOC), Bharat Petroleum Corporation and Hindustan Petroleum Corporation (HPCL) on March 22 and 23 raised petrol and diesel prices by 80 paise per litre each but paused the increase on Thursday.
“Based on current market prices, the oil marketing companies are currently incurring a revenue loss of around USD 25 (over Rs 1,900) per barrel and USD 24 per barrel on sale of petrol and diesel, respectively,” Moody’s said in a report.
If crude oil prices continue to average around $111 a barrel, the three rated entities - IOC, BPCL and HPCL - will incur a combined daily loss of around $65-70 million on the sale of petrol and diesel unless fuel prices are increased to cover the rising crude oil prices, it said. “Based on our estimates of average sales volume between November and first three weeks of March, the state-owned refining and marketing companies together have lost around $2.25 billion in revenue on petrol and diesel sales,” Moody’s said.
Also read: CNG rate increased by Re 1 in the nation's capital, here's the new rates
This equates to around 20 per cent of the combined FY2021 EBITDA for the three entities.
Moody’s also thinks the government will allow oil marketing companies to cover their losses by raising fuel prices. “We do expect that the government will allow the refiners to adjust prices appropriately and avoid a situation where refiners continue to make losses of this magnitude for a prolonged period,” it said.
Also read: Fuel saving Vs Gender bias: Here's what Jet Airways CEO picked
subscribe to Asianet Newsable WhatsApp channel by clicking here. For more reliable and latest news
subscribe to Asianet Newsable Telegram channel by clicking here.