According to a letter from the Federation of Indian Petroleum Industry (FIPI), selling petrol and diesel at losing petrol of Rs 14-18 and Rs 20-25 per liter below rising crude oil market prices is a non-sustainable practice. According to PTI, the business group has asked the government to help create an atmosphere encouraging investment.
Unsustainable losses have been reported to the government by a trade association comprising oil refiners and marketers like Jio-bp (private), Nayara Energy (public), Indian Oil (private), BPCL (public), HPCL (private), and others.
“The Federation of Indian Petroleum Industry (FIPI), which includes state-owned corporations such as IOC, BPCL, and HPCL, wrote to the Petroleum Ministry on June 10 claiming that losses on petrol and diesel will restrict future investments in retailing businesses.”
Fuel sales at present losses, according to FIPI, will lead to fewer investments in the retail sector.
In the wake of Russia’s invasion of Ukraine, international crude oil prices have soared, but state-owned oil corporations that control 90% of the domestic market have frozen petrol and diesel prices at two-thirds of the cost.
Private companies like Jio-bp, Rosneft-backed Nayara Energy, and Shell were forced to either hike prices and lose consumers or reduce sales as a result of this. Pumps have been shutting down in many states recently, causing a fictitious scarcity.
Despite increasing market prices, pump prices were held for a record 137 days from early November 2021 to March 21, 2022.
A total of Rs 10 per liter was added to the price of gasoline and diesel as of March 22, 2022, when the retail selling prices were raised 14 times, with an average daily rise of 80 pence. Director-general Gurmeet Singh of the FIPI noted, “However, the under-recoveries (losses) remain quite high in a range of Rs 20-25 per litre for diesel and Rs 14-18 per litre for losing petrol.”
Wholesale diesel prices have risen in tandem with the rise in international oil costs, despite a standstill in retail rates since April 6. A significant increase in the losses suffered by private gasoline retailing enterprises was the consequence of this quick transfer of bulk diesel (direct consumers) sales to retail outlets, according to FIPI.
Private oil marketing businesses investing in the retail sector face a tough investment climate, thus we urgently want your cooperation in topics connected to retail selling prices of petrol and diesel.
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