According to three people with knowledge of the situation, state-run oil companies may decide to lower the price of gasoline and diesel when they announce their third-quarter earnings next month. These results are expected to show that their combined net profits have surpassed a record ₹75,000 crore, despite declining costs associated with acquiring crude oil.
Since April 2022, public sector fuel merchants have maintained their rates. According to officials, a comprehensive pricing assessment is about to take place, and the enterprises may have profits of up to ₹10 per litre that they can pass on to customers. Ahead of the general elections in 2024, the action might become important and help control inflation.
“Due to higher marketing margin on sale of fuels, the three OMCs (oil marketing companies) posted significant net profit in Q1 and Q2 [of FY2023-24] and the trend will continue in Q3. After results by the end of this month, they may consider reducing petrol and diesel rates between ₹5 and ₹10 a litre, keeping some cushion for future spike in international oil prices. A decision will be taken by the companies in consultations with their stakeholders,” an anonymous person said to HT.
In all three of the OMCs, the government holds a majority share and acts as the promoter. As of now, the three companies’ combined net profit for the first half of 2023–24 was ₹57,091.87 crore, a 4,917% increase over the ₹1,137.89 combined net profit for the full fiscal year of 2022–23.
The other two companies, Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Ltd (BPCL), are anticipated to release announcements around the same time as Hindustan Petroleum Corporation Ltd (HPCL), which said it will release its Q3 results on January 27.
An email requesting information on this subject was not answered by IOC, BPCL, or HPCL.
The central government reduced excise duty twice, by ₹13 on petrol and ₹16 on diesel, to protect consumers when average crude purchase prices (Indian basket) soared from $73.30 per barrel in December 2021 to $112.87 per barrel in March 2022 and then to $116.01 per barrel in June 2022, according to data. On April 6, 2022, OMCs froze petrol and diesel rates amid volatility in international oil prices.
The decreased price of crude oil, which is evident in other deregulated fuel products, is the reason why experts claim that the downward trend in gasoline prices is continuing “PSU OMCs have lowered domestic ATF [aviation turbine fuel] price by 4% MoM for Jan-24 to Rs102/ltr (in Delhi), largely on account of a decline of ~USD5/bbl in crude oil prices. Brent is currently trading at ~77/bbl levels, thereby pointing to further price cuts,” a research report of Emkay Global Financial Services said.
