Oil price slump to help cut rev loss on fuel sales: Govt

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26 Aug, 2025 12:21

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The slump in global oil prices to over five-and-a-half-year lows will help cut revenue loss on fuel sales by about 10 percent to Rs 77,000 crore in the current fiscal, Oil Secretary Saurabh Chandra said Friday.

Revenue loss, known as under-recoveries or the difference between imported cost and retail selling price, will go down further to about Rs 40,000 crore if the global oil prices stabilise at current levels of USD 50 per barrel. "The under recoveries as per the latest calculation will be about Rs 77,000 crore as compared to Rs 85,000 crore previously estimated," he told reporters here.

Chandra said the under recoveries may come down further if the international crude oil prices fall. He said the crude oil prices during the quarter are going to be "range-bound, may be between USD 50-60, they may stabilise around USD 50 and continue."

The under recoveries of the downstream oil companies for the financial year 2013-14 were Rs 1,40,000 crore which came down to Rs 86,000 crore around July, when Finance Minister Arun Jaitley presented the NDA government's maiden budget.

Chandra also said, depending on where the (crude oil) prices are, the under-recoveries would be between Rs 40,000 crore and Rs 55,000 crore.

According to a latest report by rating agency ICRA, the crude oil prices are expected to remain at low levels in the near-term, although oil prices could marginally recover over the next 1-2 years with slower production growth and demand recovery. Lower crude oil prices would materially impact profits of crude oil producers in India, it said.

Icra expected ONGC and OIL's subsidy discount to decline from USD 59 per barrel in FY'14 to USD 40-45 in FY'15.

If crude oil prices sustain in the range of USD 50-55 a barrel, the extent of discount for upstream companies would be a key driver of profits in FY'16, the report added.