OMCs In Discussion With Govt Over Petrol, Diesel Price Hike

Oil marketing companies (OMCs) are in discussions with the central government about raising prices of petrol and diesel as they are incurring losses on the sale of retail fuel.

The discussions are being held as state-run OMCs are planning to raise fuel prices in the coming days to offset the losses, Moneycontrol reported on Monday.

“OMCs are incurring under-recoveries on sales of petrol, diesel, and LPG and are in regular touch with the Petroleum Ministry and the Finance Ministry, where discussions on price hikes are taking place,” a senior government official was quoted as saying in the report.

There could be a hike of Rs 2-4 per litre, another government official was quoted as saying.

In the last two months, crude oil prices have surged over 60 percent due to the energy crisis triggered by the closure of the Strait of Hormuz in the Gulf after the start of the war in the region.

While global benchmark Brent Crude is currently hovering around the $110 per barrel mark, retail prices of petrol and diesel in India have remained frozen.

Since the completion of assembly elections in four states, it is being anticipated that a hike in fuel prices was a matter of time.

On May 1, OMCs had raised the prices of commercial gas cylinders by a whopping Rs 993, while jet fuel prices had seen an increase of about 5.33 percent. However, the prices of petrol and diesel were not hiked.

In March, Petroleum Minister Hardeep Singh Puri had said that OMCs were incurring a loss of around Rs 24 per litre on petrol and Rs 30 per litre on diesel as global crude oil prices surged to record levels.

Retail fuel prices in India have not been raised for the last four years. However, the government is of the view that under-recovery on the sale of petrol and diesel does not necessarily mean a loss to the OMCs.

While their margins may have taken a hit, the companies could still be in overall profit.