Loss of Rs 14-18 per liter on selling petrol to Jio-BP and Naira Energy, huge loss on diesel too
Highlights
- International crude oil price at a decade high
- The price is not increasing in the domestic market but the rise in the international market continues
- FIPI appealed to the government to intervene in this matter
Jio-BP And companies like Naira Energy are losing Rs 20 to 25 per liter on the sale of diesel and Rs 14 to 18 on petrol. This loss is being caused due to the increase in the prices of crude oil despite the rise in prices. These companies have written to the Petroleum Ministry and urged the government to take steps to create a viable investment environment. The Federation of Indian Petroleum Industry (FIPI), in a letter to the Petroleum Ministry on June 10, has said that the loss on sale of petrol and diesel will limit investment in retail business. FIPI counts Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) as its members, apart from private sector companies.
Rise in the price of crude oil in the international market
International prices of crude oil and its products have hit a decade high, but state-run fuel retailers have ‘freezed’ petrol and diesel prices. Government companies account for 90 per cent of the fuel retail business. At present, the fuel prices are only at two-thirds of the cost cost, which is hurting private companies. This has put Jio-BP, Rosneft-backed Naira Energy and Shell at risk of either raising prices or losing customers. There was no increase in retail selling prices for petrol and diesel for a record 137 days between the beginning of November 2021 and March 21, 2022, despite the hike in crude oil prices. With effect from March 22, 2022, the retail selling price was increased by an average of 80 paise per liter per day on 14 occasions, leading to an increase of Rs 10 per liter in both petrol and diesel prices. FIPI Director General Gurmeet Singh has written in the letter that selling fuel at below cost (under-recovery) to private companies is causing a loss of Rs 20-25 per liter on diesel and Rs 14-18 per liter on petrol. .
Retail fuel prices did not increase from April 6
Retail fuel prices have not increased since April 6. At the same time, the price of fuel sold to bulk buyers like state transport undertakings has increased in line with international prices. FIPI said that due to this a large number of wholesale buyers are buying from retail outlets, which is adding to the losses of private sector companies. In the letter, an appeal has been made to the government to intervene in this matter. FIPI said that all the petroleum marketing companies in the private sector are investing heavily in the retail sector, but at present they are facing a difficult situation. It has been said in the letter that this is affecting the ability of private companies to invest as well as operate. Also they are not able to expand their network.
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