Rs 3 per litre fuel price hike cuts losses by 25%; daily loss drops to Rs 750 crore

New Delhi: Despite a recent Rs 3-per-litre increase in petrol and diesel prices, state-run oil marketing companies (OMCs) continue to incur under-recoveries of around Rs 750 crore per day, according to the Ministry of Petroleum and Natural Gas.

The price revision, the first in more than four years, came into effect on May 15 after daily losses had soared to an unprecedented Rs 1,000 crore. The hike has trimmed losses by nearly a quarter, but elevated global crude prices and a weak rupee are still preventing full cost recovery.

"Still there is Rs 750 crore a day under-recovery,” Sujata Sharma, Joint Secretary in the Ministry of Petroleum and Natural Gas, told reporters here.

She added that the recent increase had helped reduce overall daily losses from Rs 1,000 crore.International oil prices surged sharply following the US-Israeli conflict with Iran, which triggered the largest-ever disruption in oil supplies, particularly through the Strait of Hormuz.

To shield the domestic market, OMCs continued selling petrol and diesel at two-year-old rates until mid-May.

Losses accumulated rapidly, reaching Rs 1 lakh crore in a quarter — equivalent to wiping out an entire year’s earnings for the companies.

According to Crisil estimates, even after government excise duty relief and the latest price hike, under-recoveries stand at about Rs 10 per litre on petrol and Rs 13 per litre on diesel.

Cumulative losses since the start of the conflict are projected to exceed Rs 1 lakh crore by the end of May.

A government bailout in the form of direct subsidies to cover losses on petrol, diesel, and LPG is “still not on the table,” Sharma said.

Analysts noted that while the price increase provides some relief to fuel retailers, it offers only limited respite amid persistently high global crude prices. The move is also expected to exert modest upward pressure on inflation.