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Fuel subsidies are back: Oil companies to get Rs 300 billion for holding petrol, diesel prices
The Union Budget for 2023-24 will dole out Rs 300 billion to state-owned fuel retailers to make up for the massive losses they ran because of holding petrol and diesel prices despite rise in cost in a bid to help the government contain inflation. Finance Minister Nirmala Sitharaman has allocated the money under the head “capital support to oil marketing companies”. It offered no explanation why the blue chip, cash rich oil PSUs should need capital support.
Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) haven’t changed petrol and diesel prices since April 6, 2022, despite input crude oil prices rising from USD 102.97 per barrel that month to USD 116.01 per barrel in June and falling to USD 80.92 per barrel this month.
Holding prices when input cost was higher than retail selling prices led to the three firms posting net earnings loss. They posted a combined net loss of Rs 212.0118 billion during April-September despite accounting for Rs 220 billion announced but not paid LPG subsidy for past two years.
That freeze had led to record high losses of Rs 17.4 per litre on petrol and Rs 27.7 a litre diesel for the week ended June 24, 2022. However subsequent softening led to losses on petrol being eliminated and diesel coming down to Rs 10-11 a litre. Retail rates havent been changed when oil prices well to help the oil companies recoup the massive Rs 500 billion under-recovery they ran for holding prices.
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