Cabinet likely to approve Rs 22,000 cr subsidy package for Indian Oil, BPCL, HPCL

The Union Cabinet is likely to approve subsidies for oil marketing companies like Indian Oil Corporation Ltd (IOCL), Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL), sources told Business Today TV. The Cabinet is likely to clear Rs 22,000 crore for these companies for losses they have incurred on retail sales of petrol and diesel. 
 
The OMCs have incurred heavy losses on the sale of petrol and diesel due to non-revision of prices for a record 137 days from November 4, 2021 to March 22, 2022.  
 
Earlier this year, Moody’s Investor Service in a report said that since November last year, state-owned refining and marketing companies together incurred a loss of about USD 2.25 billion (Rs 17,000 crore) in revenue on petrol and diesel.
 
Last month, BPCL chairman and managing director Arun Kumar Singh said that state-owned oil marketing companies did not raise prices for almost five months despite rise in international crude prices. He said that international oil prices were highly volatile, rising or falling by USD 5-7 per barrel on a single day. 
 
The top official said that his company's ability to pass on this kind of volatility was simply not there. No marketer can transfer this kind of volatility, he said, adding that it was BPCL's deep desire to absorb volatility. "We don't pass on sharp increases or fall in prices," he said. 
 
The BPCL chairman further said that the oil companies decided to absorb some losses with the hope that they can make up for those losses later. At one point, the fuel retailers were losing Rs 20-25 per litre on diesel and Rs 14-18 a litre on petrol as international oil prices soared, according to news agency PTI.
 
However, these losses were cut down as the crude prices moderated. "Next month onwards there will be no losses on LPG. We don't have any losses on gasoline (petrol) today," Singh said, adding that there are some losses on diesel.