Govt rules out bailout for oil firms despite mounting fuel losses

New Delhi: The Centre on Monday ruled out any financial support to state-owned oil marketing companies (OMCs) for the mounting losses they are incurring by selling petrol, diesel and domestic aviation turbine fuel (ATF) below cost.

Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) are facing substantial under-recoveries after maintaining a nearly four-year freeze on retail petrol and diesel prices, even as global crude oil prices have surged due to West Asia conflict.

The companies have also begun booking losses on jet fuel (ATF) for the first time in over two decades.

“There is no proposal before the government to support oil marketing companies (for their losses),” said Sujata Sharma, Joint Secretary in the Ministry of Petroleum and Natural Gas told reporters here.

Despite sharp increases in input costs, retail prices of petrol and diesel have not been revised, resulting in under-recoveries of Rs 25-28 per litre. Domestic ATF prices for Indian airlines were raised by only 25 per cent last month — a fraction of the required increase — and remained unchanged this month.

In contrast, ATF prices for foreign airlines were hiked by over 5 per cent in the latest revision.On the domestic front, prices of household LPG were increased by Rs 60 per 14.2-kg cylinder on March 7, but this was insufficient to cover the full rise in costs, leading to continued losses for the OMCs.

The government has historically provided budgetary subsidies for LPG under-recoveries, but no such assurance has been extended this time.

Sharma emphasised that the government’s priority has been to shield consumers from inflationary pressures.

"Every effort has been made to protect the consumers (by not raising retail prices). Consumer interest has been kept in mind when deciding on the revision,” she said.

As a result, only select non-retail segments have seen price adjustments. Bulk or industrial diesel prices were raised from around Rs 137 per litre to over Rs 149 per litre, while commercial LPG (used by hotels and restaurants) was hiked by Rs 993 to a record Rs 3,071.50 per 19-kg cylinder. Market-priced 5-kg LPG cylinders also saw a sharp increase from Rs 549 to Rs 810.50.These segments, however, account for just about 10 per cent of total fuel consumption, Sharma noted.

Retail petrol and diesel prices at fuel pumps remain unchanged at Rs 87.62 per litre for diesel, for instance.

In the latest monthly revision on May 1, ATF prices for international airlines rose by USD 76.55 per kilolitre (5.33 per cent) to USD 1,511.86 per kl. Domestic ATF for Indian airlines continues to be capped at Rs 1,04,927.18 per kl, with oil companies absorbing the global price surge to support the aviation sector and end consumers.

The OMCs’ decision to hold back full pass-through of costs comes amid supply disruptions caused by the West Asia conflict, reflecting a clear policy tilt towards checking inflation and protecting households and key sectors.