OMCs improve marketing margins by holding auto fuel prices

By: |
August 25, 2021 1:30 AM

The marketing margin on petrol was almost zero on July 20, and on diesel was Rs 2.9/litre. Pump price of petrol in Delhi was Rs 101.49 per litre on Tuesday, while diesel sold at Rs 88.92/litre

In March and May 2020, surcharge and cess on auto fuels were cumulatively increased by Rs 13 per litre on petrol and Rs 16 per litre on diesel, leading to record-high auto fuel rates.In March and May 2020, surcharge and cess on auto fuels were cumulatively increased by Rs 13 per litre on petrol and Rs 16 per litre on diesel, leading to record-high auto fuel rates.

Not reducing retail auto fuel rates even with global crude oil prices softening since mid-July has helped state-run oil marketing companies (OMCs) improve their marketing margins to Rs 3.2/litre and Rs 4.6/litre for petrol and diesel, respectively, analysts have said.

The marketing margin on petrol was almost zero on July 20, and on diesel was Rs 2.9/litre. Pump price of petrol in Delhi was Rs 101.49 per litre on Tuesday, while diesel sold at Rs 88.92/litre

Retail motor fuel prices touched all-time highs across the country on July 17 and remained unchanged till August 17. Petrol prices are now lower by 35 paise/ litre from the peak price on August 21, while diesel has been made cheaper by 95 paise since August 18. Global crude has corrected from the highs of $75 per barrel in mid-July to the current level of $70 per barrel.

“If crude stabilises at current spot price, our calculations imply surplus marketing margin of around `6.5/litre on diesel and petrol at current selling prices,” analysts at Jefferies said in a recent note. OMCs have apparently been deferring cuts in fuel prices to make up for the losses suffered between late February to May, when they could not hike prices in conformity with the crude movements, due to Assembly elections in four states and the UT of Puducherry.

The Centre’s tax (basic excise, surcharge, agri-infra cess and road/infra cess) is currently Rs 31.80 per litre for diesel and Rs 32.90 per litre for petrol, while Delhi state VAT is Rs 23.50 per litre on petrol and Rs 13.14 per litre on diesel. In March and May 2020, surcharge and cess on auto fuels were cumulatively increased by Rs 13 per litre on petrol and Rs 16 per litre on diesel, leading to record-high auto fuel rates.

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