The fuel price revision on Wednesday is likely to wipe out the Rs 1,100 crore net revenue earned by the three oil marketing companies (OMC) — Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) — in the last one month, say officials from these companies.
Prior to the price cut, these companies were getting a high retail margin of Rs 8 per litre on petrol and Rs 3 per litre on diesel, which more than offset the under-recoveries on LPG (Rs 32 per cylinder) and kerosene (Rs 14 per litre).
With the price-cut of Rs 5 per litre on petrol, Rs 2 on diesel and Rs 25 per LPG cylinder along with the increase in crude oil prices, these margins are likely to be eroded.
The price of the Indian basket of crude has already crossed $40 per barrel from a low of $35 last month.
Analysts say the price revision could impact the January-March quarter’s margins of these companies, especially if international crude oil prices rise further.
“This price reduction could also spur demand, and if the international crude oil prices also spike, together they could impact the bottom line of the oil marketing companies,” said a Mumbai-based analyst.
