representative image.
Highlight
- Private oil companies are incurring losses due to government companies not increasing the prices of petrol, diesel.
- Oil companies in India are facing Rs 15/Litre due to the high price of crude oil in the international market.
- Petrol, diesel prices in the country have not increased for more than 120 days
Oil companies, especially private companies, are suffering huge losses due to the sale of petrol, diesel in the country, at a time when the price of crude oil is at a record high in the international market.
Over the past several weeks, crude oil prices in the international market had reached $140 a barrel, the highest in the last week alone. Though it fell again to $110, it is still over $80 a barrel, hurting public sector companies as the government does not allow hike in petrol, diesel prices for more than 120 days. Dr Sudhir Bisht, International Crude Oil Specialist.
Petrol and diesel are still selling at $80 a barrel at a time when crude oil prices are rising in the international market.
Oil companies like Indian Oil Corporation (IOC) Ltd., Bharat Petroleum Corporation (BPC) Ltd. and Hindustan Petroleum Corporation (HPC) Ltd. are incurring losses of Rs 15 per liter, which is called under-recovery in technical terms.
Due to no increase in the prices of petrol and diesel, the government companies are silently incurring losses. But the anger of private sector companies is starting to show in the market.
Meanwhile, Reliance has told its dealers that they will get only 50 per cent of their normal sales supply. The company believes that under-recovery of Rs 15 is fatal to their financial health.
At present, Reliance has not tied the quota of petrol because the sale of petrol is only 15% as compared to diesel. Reliance Petrol now runs under the brand name of Jio-BP. British Petroleum (BP) is a well-known company in the world.
Sudhir Bisht asked why Reliance would sell its diesel at a loss when it has many export orders.
It is also being indicated in the international market that although India sells petrol, diesel under free-market pricing, state-owned oil companies are being forced not to increase prices.
Private sector companies are also forced to keep the prices low, because if Reliance increases the price of its diesel by Rs 15, then no transporter will take oil from their pumps.
Such market intervention by the Government of India will adversely affect the success of BPCL’s disinvestment.
read also , India not violating sanctions, but Russian oil deal may put it on ‘wrong side of history’: US
read also , India’s legitimate energy transactions should not be politicised: Sources on oil purchases from Russia