Petrol and Diesel Prices Will Not Rise: Government Devises This Plan to Provide Relief to the Public..
Public Sector Petroleum Marketing Companies (OMCs) are considering paying refineries a price for petrol and diesel that is lower than the imported rates, in an effort to mitigate the losses they are incurring due to their inability to raise retail fuel prices. This move could adversely impact single-refinery companies such as MRPL, CPCL, and HMEL. Before the crisis in West Asia, international crude oil prices hovered around $70 per barrel; they have now surged past the $100 mark. However, retail prices for petrol and diesel in India have remained static, compelling the petroleum marketing companies to shoulder the burden of this price hike themselves.
The Plan Taking Shape
Sources familiar with the matter revealed that OMCs are now exploring options to either cap the Refinery Transfer Price (RTP) or impose a discount on it. The RTP is the internal price at which refineries sell fuel to their respective marketing divisions. The objective of this measure is to pay refineries a price for petrol and diesel that falls below the import parity cost. If global oil prices remain elevated, this proposed move would prevent refineries from fully passing on the increased cost of crude oil through the RTP, thereby forcing them to absorb a portion of this financial impact themselves.
How Losses Will Be Offset
According to sources, integrated companies—such as Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL)—can offset these losses by balancing them across their refining and marketing operations. Conversely, single-refinery entities—such as Mangalore Refinery and Petrochemicals Limited (MRPL), Chennai Petroleum Corporation Limited (CPCL), and HPCL-Mittal Energy Limited (HMEL)—have a negligible presence in the retail market and sell the bulk of their output to these three OMCs. Consequently, their profit margins are expected to bear the brunt of this impact.
Reliance is also to be Impacted
Sources further stated that if the ban or exemption regarding the RTP (Retail Trade Obligation) is extended to private refineries as well, refinery companies such as Nayara Energy and Reliance Industries Limited would also be affected. Both of these private companies sell a significant portion of their production to OMCs. These two private refineries sell a large share of their petrol and diesel output to Oil Marketing Companies (OMCs), which own and operate 90 percent of the country's more than 100,000 petrol pumps.
Disclaimer: This content has been sourced and edited from TV9. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
