Winning Bizness Desk
Mumbai.India’s state-run oil companies are facing massive financial stress as petrol and diesel prices remain unchanged despite a sharp rise in global crude oil rates triggered by the ongoing conflict in West Asia. Even after international crude prices jumped nearly 50% in recent weeks, fuel prices in the Indian market have stayed at levels seen almost two years ago.
According to sources, government-owned oil marketing companies have already suffered losses of more than ₹1 lakh crore in the last 10 weeks alone. The burden is being carried mainly by Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL), which continue to shield consumers from the impact of the global energy shock.
Fuel prices unchanged amid global pressure
The three oil companies are reportedly losing between ₹1,600 crore and ₹1,700 crore every day on the sale of petrol, diesel and LPG cylinders. Despite rising import costs, petrol continues to be sold at around ₹94.77 per litre and diesel at ₹87.67 per litre in several markets.
Officials say the companies have absorbed the losses instead of passing the burden directly to consumers. The decision has helped control inflation and avoid sudden pressure on household budgets at a time when global markets remain unstable.
Key reasons behind rising losses include:
- Sharp rise in global crude oil prices
- Supply disruptions due to the West Asia conflict
- Stable domestic fuel prices despite higher import costs
- Reduced government taxes on petrol and diesel
Government cuts duties to ease burden
India depends heavily on imports to meet its energy needs. Nearly 40% of crude oil, 90% of LPG and 65% of natural gas requirements are fulfilled through imports. With supply lines affected by the war situation, import costs have increased sharply over the past few weeks.
While countries such as Japan and the United Kingdom raised fuel prices by nearly 30%, the Indian government chose a different route. It reduced excise duties to prevent fuel prices from rising further.
The duty on petrol was cut from ₹13 to ₹3 per litre, while excise duty on diesel was reduced from ₹10 to almost zero. Sources say the Centre is currently absorbing nearly ₹14,000 crore every month because of these tax cuts.
Pressure grows on company finances
Industry experts warn that continued losses could weaken the financial health of oil marketing companies. Fuel sales remain their main source of revenue, which is used to buy crude oil, maintain supply chains and invest in infrastructure projects.
Analysts fear that if fuel prices remain frozen for a longer period, future investments may slow down. Projects linked to refinery expansion, clean fuel transition and modern energy infrastructure could face delays.
Major concerns now include:
- Rising dependence on loans for working capital
- Pressure on company balance sheets
- Delays in refinery expansion projects
- Impact on clean fuel and energy transition plans
Political call on fuel price hike
Sources indicate that an increase in petrol and diesel prices may now become unavoidable. However, the timing and scale of any hike will depend entirely on the Centre, as fuel pricing remains politically sensitive.
For now, the government appears focused on balancing public relief with economic pressure. But with global crude prices still volatile and company losses mounting daily, policymakers may soon have to take a difficult call on fuel prices.
