New Delhi: Oil marketing companies (OMCs) like Indian Oil and Bharat Petroleum are selling diesel at a loss of Rs 18 per litre and petrol at Rs 14 litre despite the recent reduction in excise duty, rating agency ICRA said on Wednesday.
Pump prices of normal petrol and diesel have remained stable despite the sharp increase in crude oil prices due to the West Asia conflict in the past two months.
Trump meets with oil executives as Iran stalemate drags on"The stable pump prices for auto fuels amid elevated crude oil prices are impacting the profitability of the oil marketing companies," said
Prashant Vasisht, Senior Vice President & Co-Group Head, ICRA.
As per the Petroleum Ministry data, price of Indian crude basket surged from an average $63 per barrel in January to $113 per barrel in March and to $116 per barrel in April.
Following the outbreak of the US-Israel-Iran conflict on February 28, the prices of cooking gas, premium petrol and diesel for industrial use were increased.
Despite the sharp increase in cooking gas price, according to ICRA, the government and OMCs are likely to incur a loss of Rs 80,000 crore on LPG supply in the current financial year if the prices are not hiked further.
Fertiliser subsidy burden is estimated to jump to Rs 2.05-2.25 lakh crore in 2026-27, sharply higher than the budgeted Rs 1.71 lakh crore.
The fertiliser sector faces significant cost pressures driven by rise in the sulphur and ammonia prices, which in turn feed into other raw materials and finished products.
For the urea segment, the pool prices rose to $19 per metric million British thermal unit (mmbtu) in April from $13 per mmbtu prior to the outbreak of the West Asia conflict.
While a major share of the natural gas requirement is currently being met through imports of spot LNG cargoes, the availability of adequate natural gas on an ongoing basis is critical amid global LNG supply disruption, ICRA said.
ICRA expects the elevated energy and key input prices to weigh on the profitability of several key downstream sectors in the current financial year. The decline in profitability is likely to affect the credit profile of companies dependent on crude, LNG and other input from West Asia.
Russia says UAE's exit from OPEC will increase global production, bring down oil prices"The profitability of Phosphatic & Potassic (P&K) fertiliser manufacturers and traders is expected to moderate as the recent revision in the nutrient-based subsidy rates are not reflective of the cost pressures faced by the industry," said Vasisht.
He added that the expected impact of El-Nino on the monsoon in the upcoming Kharif season, would affect the ability of farmers to absorb price increases.