The oil ministry will seek compensation from the finance ministry for the losses state-owned fuel retailers incurred on holding petrol and diesel prices in the last eight months despite a spike in cost of raw material, a top official said on Friday.
Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) posted a combined net loss of Rs 21,201.18 crore in April-September.
This loss would have been higher but for them accounting for Rs 22,000 crore yet-to-received LPG subsidy for past years.
“The first half losses are publicly available. Add to that the LPG subsidy and you would arrive at approximate loss they have incurred,” the official said.
Since holding of the prices benefited the economy in terms of not add to the already high inflation rate, there is a case for the oil marketing companies (OMCs) to be compensated, he said.
“Petrol and diesel prices are deregulated (not controlled or dictated by the government). OMCs are free to fix the rates daily on the basis of benchmark international oil prices. But they on their own volition decided to keep the prices on hold,” he said.
The oil ministry will calculate the likely losses for the entire fiscal year before approaching the finance ministry for the compensation.
The three fuel retailers are still losing money on sale of auto fuel despite softening international rates.
They have not changed prices since April 6 despite international oil prices shooting up to more than a decade high.
The government in October doled out Rs 22,000 crore to the three firms as a one-time grant to make up for the losses they incurred on selling domestic cooking gas (LPG) in two years starting June 2020.
The oil ministry had sought Rs 28,000 crore for the LPG losses but got Rs 22,000 crore.
The softening of international oil prices had raised the expectation of a cut in petrol and diesel prices.
The basket of crude oil that India imports had shot up to USD 116 per barrel in June but has moderated to USD 83.23 this month.
If the price reduction happens, this will be the first cut since May 22 when the government cut excise duty on the two fuels to shield customers from high global prices and rein in inflation.
Petrol and diesel prices are supposed to be revised daily but state-owned fuel retailers have not exercised their rights since April 6. Rates have been on freeze since then except on May 22 when prices were reduced following a cut in excise duty.
Prior to the April freeze, petrol and diesel prices had gone up by Rs 10 per litre each.
Petrol currently costs Rs 96.72 a litre in the national capital and diesel is priced at Rs 89.62.