Oil firms not to recoup losses arising from Re 1/litre subsidy on petrol, diesel; suffer losses of about Rs 4,500 cr

New Delhi: State-owned oil firms have no plans to recoup losses they made on subsidising petrol and diesel by Re 1 per litre even though rates have now become at par with the cost, top officials said. Scrambling to contain spiraling prices, the government on 4 October last year cut excise duty on petrol and diesel by Rs 1.50 per litre each and asked PSU oil firms to absorb another Re 1 a litre. This immediately resulted in a Rs 2.50 per litre decline in prices which had touched an all-time high on rising international rates. “We are not recovering any of the losses,” Indian Oil Corp (IOC) chairman Sanjiv Singh told reporters here. [caption id=“attachment_5320661” align=“alignleft” width=“380”] Representative image. Reuters[/caption] IOC along with Hindustan Petroleum Corp Ltd (HPCL) and Bharat Petroleum Corp Ltd (BPCL) took a hit of about Rs 4,500 crore from absorbing Re 1 a litre hike. “When prices were going up, the government requested us to consider absorbing Re 1 per litre and we lowered the price by Re 1 per litre,” he said. “But subsequent to that rates have been on the decline which we have passed on to consumers on each single day.” The hit, he said, was a “one day affair”. He said since mid-October petrol price has fallen by Rs 14.18 per litre and diesel by Rs 13.03 per litre. “We passed on all of the decline in international prices to consumers.” HPCL chairman and managing director M K Surana said retail prices are now at par with their benchmark international fuel rates. “The decision to absorb Re 1 per litre was a temporary and since then rates have levelled with their base price,” he said. Both Singh and Surana said there is no decision to recoup any of the losses the companies had suffered. “No we are not recouping any loss,” Singh said. Petrol costs Rs 68.65 a litre in Delhi and diesel is priced at Rs 62.66. Petrol prices, which have been on a decline since 18 October except for one day, are at their lowest level in almost 13 months. Diesel rates are at their lowest since March 2018. Petrol price had touched a record high of Rs 84 per litre in Delhi and Rs 91.34 in Mumbai on 4 October. Diesel on that day had peaked at Rs 75.45 a litre in Delhi and Rs 80.10 in Mumbai. Prices had started to climb from 16 August. Petrol in Delhi was priced at Rs 77.14 and in Mumbai at Rs 84.58 per litre on August 15. Diesel on that day was priced at Rs 68.72 per litre in Delhi and Rs 72.96 per litre in Mumbai. Between 16 August and 4 October, petrol price was hiked by Rs 6.86 per litre and diesel by Rs 6.73 per litre. On that day, the government decided to cut excise duty on petrol and diesel by Rs 1.50 per litre each and asked state-owned fuel retailers to subsidise the price by another Re 1 a litre by reducing their margins. Subsequent to this, the petrol price moderated to Rs 81.50 per litre in Delhi and diesel to Rs 72.95 a litre on 5 October. In Mumbai, rates fell to Rs 86.97 per litre for petrol and Rs 77.45 in case of diesel. As the international oil prices continued to rise, price of petrol and diesel in Delhi increased to Rs 82.83 and Rs 75.69 on 17 October. In Mumbai, rates touched Rs 88.29 a litre for petrol and Rs 79.35 for diesel. But since then, international oil prices have been falling and rupee has also appreciated, resulting in a decline in retail rates. During the last two and half months, petrol price rose on just one day — by 10 paise on 18 December. Diesel rates rose on December 17 and 18 by 9 paise and 7 paise respectively. Both Singh and Surana said prices are likely to continue to be soft in the near future.