No plans of more financial support to OMCs, says Union petroleum minister

Representative image

There are no plans for more financial support to oil marketing companies (OMCs) as diesel under-recoveries will stop if crude prices remain stable, Union Minister of Petroleum and Natural Gas Hardeep Singh Puri said on February 8. The minister was speaking to Moneycontrol on the sidelines of India Energy Week.

The public sector OMCs did not revise prices for petrol and diesel from November 2021 to March 2022 despite a steep rise in crude oil prices, which put their margins under pressure. In the first half of FY2022-23, the three oil marketing companies — Indian Oil Corporation (IOCL), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) —reported a combined loss of Rs 27,276 crore, according to a statement from the oil ministry.

At present, the OMCs continue to incur losses from the sale of diesel, which the minister expects will reduce as crude oil prices are now stabilising. “If prices remain like this, even diesel under-recoveries will stop,” Puri added.

Read the full interview here: Govt taking strenuous steps to scale up oil exploration, production: Oil Minister Puri

Commenting on his interaction with the OMCs over added financial support, the minister said, “I meet them every day, and they whine, and rightly so. After a while, they also understand that I have a job to do. I can’t go to the Finance Minister with a request for compensation every time.”

He also highlighted the Rs 10 lakh crore capital expenditure outlay from the Union Budget 2023-24, and said, “A 33.3 percent increase in capital expenditure. Oil companies gain from that also. I mean, cement will gain, steel will gain, and transporters will gain. India’s consumption is way beyond pre-Covid levels. So, you know, this is the game, and if you’re a good corporate citizen, and you have a not-so-good day, you make a whopping profit the next day. So that’s the spirit in which it’s done.”