OMCs incurring under-recoveries of over Rs 9/litre on diesel sales

State-run OMCs incur under-recovery of Rs 9-10 per litre on diesel

State-run oil marketing companies (OMCs) are currently facing an under-recovery of approximately Rs 9 to Rs 10 per litre on the sale of diesel, CNBC-TV18 reported citing industry sources.

Large OMCs such as Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) are also facing losses of about Rs 1 to Rs 2 per litre on the sale of petrol, according to the business television channel.

This comes as crude oil prices have been rising in the recent months and touched the highs of $97 per barrel in September—the highest in the last 10 months.

The sources said diesel under-recovery would be higher if export cess was not set off and added that refining margin is helping in absorbing marketing cash loss.

On September 30, government had increased windfall tax on domestically produced crude oil to Rs 12,100 per tonne from Rs 10,000 per tonne while reduced tax on sale of diesel to Rs 5.5 per litre from Rs 5 per litre.

OMCs had turned profitable in recent quarters after reporting huge losses in first half of FY22-23 due to soaring crude prices.

With prices settling around $75 per barrel in the first half of 2023, OMCs posted profits on account of healthy marketing margins. In Q1 of FY23-24, oil refining companies reported a consolidated net profit of Rs 32,147 crore.

However, as crude oil rose to around $90 per barrel in September, the performance of OMCs could again change course. OMCs are set to report Q2 numbers later in the month.