Hardeep Singh Puri wants OMCs compensated for selling fuel below market rates

The government should compensate oil marketing companies (OMCs) for the financial hit they have taken by selling petrol and diesel at less than the market rates, oil minister Hardeep Puri has said.

Indian Oil, Hindustan Petroleum and Bharat Petroleum, the three state-run OMCs, are seeking compensation for the losses they have incurred by keeping domestic retail prices frozen while international rates rocketed in 2022.

The government gave OMCs a one-time grant of ₹22,000 crore a few months back to offset their losses on cooking gas.

“Now they are telling us, look, we have taken a hit on petrol and diesel also. Their first half (2022-23) losses were about ₹28,000 crore. So, they are coming to us. It’s under discussion,” Puri said on Thursday.

“As a minister, I’m supporting them. Because tomorrow, you know, we might face the same situation again, and the guy goes into liquidation because you didn’t bail him out. Next time you won’t have the capacity,” he added.

The minister didn’t specify the amount OMCs have sought or what the government is willing to give. The companies expect an announcement on compensation in the budget.

OMCs sold petrol and diesel at prices far below international rates for several months last year. But in the October-December quarter, they are estimated to have made a profit of ₹10 per litre on the retail sale of petrol and lost ₹6.5 per litre on diesel on average, as per ICICI Securities.Puri said Indian private and state-run refiners will continue to buy crude from whoever offers it at the cheapest rate. This was in response to a query on the Indian purchase of oil from Russia.

Oil prices are unlikely to hit $110 per barrel, as predicted by some analysts until producers suddenly start cutting back supply or demand in consuming countries suddenly lifts.


Business Asia
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