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Petrol, diesel prices may be slashed by Rs 5-10 next month: Report

Indian state-run oil companies are contemplating a potential reduction in petrol and diesel prices after releasing their Q3 results, which are anticipated to surpass a record ₹75,000 crore in net profits. The move follows a period of steady fuel prices since April 2022, with officials suggesting a thorough pricing review

Petrol diesel prices may be slashed by Rs 5-10 next month: Report
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First Published Jan 17, 2024, 10:21 AM IST

State-run oil companies in India are reportedly contemplating a reduction in petrol and diesel prices next month following the release of their third-quarter results, according to a newspaper report. Expected to surpass a record Rs 75,000 crore in net profits, the oil marketing companies (OMCs) have enjoyed a lucrative period as the costs of acquiring crude oil have softened. Having held fuel prices steady since April 2022, officials suggest a pricing review is imminent, with margins of Rs 10 per litre possibly passed on to consumers, the Hindustan Times reported on Wednesday.

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The OMCs, including Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL), have witnessed significant net profits in the first half of the fiscal year 2023-24, reaching Rs 57,091.87 crore. This marks a substantial jump from the combined net profit of Rs 1,137.89 crore for the entire financial year of 2022-23.

While the government, as the majority stakeholder in the OMCs, controls them, the companies are free to adjust pump prices. A potential reduction in fuel prices, ranging between Rs 5 and Rs 10 per litre, may be considered by the end of the month after the Q3 results are declared. This move is seen as a step to mitigate inflation concerns and holds significance ahead of the 2024 General Elections.

The freezing of petrol and diesel rates on April 6, 2022, amid international oil price volatility, coupled with excise duty reductions by the central government, has contributed to the robust financial performance of OMCs. Additionally, the windfall tax on diesel exports has gradually decreased, reaching zero, and taxes on domestically produced crude oil have been reduced due to the softening of international oil prices.

As India grapples with retail inflation reaching a four-month high of 5.69% in December 2023, the potential reduction in fuel prices aims to contribute to efforts to keep inflation below the Reserve Bank of India's upper tolerance limit of 6%. The final decision on adjusting fuel prices will be taken by the OMCs in consultation with stakeholders.

HPCL is set to declare its Q3 results on January 27, while IOC and BPCL are expected to make similar announcements around the same time.

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