State-owned oil marketing companies (OMCs) are currently incurring an under-recovery of nearly Rs650 on every domestic LPG cylinder sold and about `30 per litre on aviation turbine fuel (ATF), according to a senior Petroleum Ministry official.
Sujata Sharma, joint secretary in the petroleum ministry, said the under-recovery on LPG cylinder is Rs650 a cylinder on domestic LPG, while there is an under-recovery of nearly Rs30 per litre on domestic jet fuel, but this under-recovery is variable based on international prices.
The losses have widened amid elevated global crude oil prices, triggered by the ongoing conflict involving the US, Iran and Israel in West Asia. The conflict, which has continued for more than 90 days, has severely disrupted traffic through the Strait of Hormuz, a key global energy shipping route through which nearly 20% of the world's oil and gas supplies are transported.
India, which imports nearly 88% of its crude oil requirement, has been forced to diversify its sourcing, leading to higher freight, insurance and logistics costs. Despite absorbing these costs and keeping retail fuel prices unchanged for an extended period, OMCs eventually raised petrol and diesel prices by more than Rs7 per litre each through a series of hikes. However, the government has said that OMCs continue to lose about Rs650 crore per day on sale of petrol and diesel below cost.
The government had earlier increased the price of domestic LPG cylinders by Rs60 per 14.2-kg cylinder within weeks of the outbreak of the conflict. Domestic LPG currently costs Rs913 per 14.2-kg cylinder.
Meanwhile, OMCs on Monday increased the price of commercial liquefied petroleum gas (LPG) by Rs42 to Rs3,113.50 per 19-kg cylinder. Commercial LPG, primarily used by hotels, restaurants and other establishments, was last revised on May 1 when prices were increased sharply by Rs993 per cylinder to Rs3,071.50.
The price of 5-kg free trade LPG (FTL) cylinders was also raised by Rs11 to Rs821.50 per cylinder.
In a relief for airlines, OMCs simultaneously reduced the price of ATF supplied to international carriers by $400 per kilolitre (kl), or nearly 27%, bringing the rate down to $1,100 per kl. The price was last revised on May 1 when it was increased by $76.55 per kl to $1,511.86 per kl.
The reduction brings international ATF prices closer to domestic jet fuel rates and is expected to ease cost pressures on airlines. Indian carriers had repeatedly urged the government to intervene and cap the sharp rise in jet fuel prices, which had significantly increased operating costs over the past three months.