Your fuel bill set to rise as fuel retailers Indian Oil, BPCL look to recoup losses

Your fuel bill is set to rise as the oil marketing companies (OMCs) are expected to recoup the losses in the medium term, a rating agency said. While the crude oil has been on the rally this week, the OMCs increased the fuel prices only Thursday after a hiatus of four days due to the pressure from the government on account of general elections as it can’t upset common people in this crucial time.

Yesterday, the crude oil prices crossed the level of $75 per barrel for the first time in 2019. According to experts, crude oil prices hitting $80 per barrel will pose a challenge for the fuel retailers.

Besides that, the pressure from the government to increase the shareholders returns also doesn’t bode well for the OMCs. “The oil marketing companies (OMCs) IOC, Bharat Petroleum Corporation Ltd (BPCL) and upstream entity Oil India Ltd (OIL) declared high interim dividend of 67.5 per cent to 110 percent of the face value of their shares, and undertook share buybacks in the financial year ended March 31, 2019 ,” Fitch said.

However, Fitch does not foresee any significant impact on OMCs’ financial profiles on account of fuel price controls. It expects the OMCs to make up the losses in the subsequent period during the year in such an event, according to its report.

As the rating agency expects fuel retailers to make up for the losses in the coming period, OMCs will continue to revise prices daily to reflect market prices over the medium term.

While the petrol prices have been kept the same, diesel prices have been raised up to 8 paise across the major cities in the country. Today, in Delhi the diesel is selling at Rs 66.61, up 7 paise, petrol prices are stable at Rs 73.02 per litre.

In Mumbai, the diesel price has also been hiked by  7 paise to Rs 69.72 per litre, whereas the petrol is being sold at Rs 78.59 per litre. On the other hand, in Chennai, people need to shell out Rs 75.79 for petrol, while for diesel they need to spend Rs 70.34, higher by 8 paise.

In Kolkata city, people are buying diesel and petrol at Rs  68.35 and Rs 75.04 per litre, respectively. While there is no change in the petrol price, diesel price has been increased by 7 paise.