No government financial support planned for fuel retailers’ petrol, diesel, ATF losses

The government has no plans to extend financial support to state-owned fuel retailers for the losses they are incurring on selling petrol, diesel and aviation turbine fuel (ATF) below cost, an official said on Monday.
Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) are incurring substantial losses on sale of petrol and diesel after they extended a four-year freeze on revision in retail rates despite input crude oil prices shooting up since the start of West Asia conflict over two months back. They have also, for the first time in more than two decades, begun posting losses on jet fuel (ATF) since last month, as they passed on only a part of the desired increase in prices needed to bring rates at par with cost.
“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.
While ATF prices for domestic airlines last month increased by 25 per cent – a fourth of the desired increase – there was no change in rates this month, even though the prices for foreign airlines were hiked by over 5 per cent. Similarly, despite under-recoveries of Rs 25-28 a litre, there has been no increase in petrol and diesel prices.
Domestic LPG prices were hiked by Rs 60 per 14.2-kg cylinder on March 7, but that was not enough to cover all the increased cost, and oil companies are booking under-recoveries or losses. The government has, in the past, covered for the under-recoveries on LPG through budgetary subsidy support. At the last monthly revision in rates on May 1, the aviation turbine fuel (ATF) price for international airlines was hiked by USD 76.55 per kilolitre, or 5.33 per cent, to USD 1,511.86 per kl. This came on top of a more than doubling of prices for them on April 1 to USD 1,435.31 per kl.
Alongside, prices of commercial LPG – the one used in hotels and restaurants – were hiked by Rs 993 to a record high of Rs 3,071.50 per 19-kg cylinder. The rates for 5-kg FTL or market-priced LPG cylinders were hiked from Rs 549 to Rs 810.50 per bottle.
The 5-kg FTL cylinder now costs just a shade lower than the Rs 913 rate for a 14.2-kg cylinder used in household kitchens (called domestic LPG). Also, prices of bulk diesel, used by industrial users like telecom signal towers, were increased from about Rs 137 per litre to over Rs 149 a litre.