OMCs’ losses mount to Rs 21K crore in first half

Overall, in the first half of the current financial year, the three government-owned OMCs have reported a cumulative loss of Rs 21,400 crore.

NEW DELHI: Even as the government provided one-time Rs 22,000 crore relief, the oil marketing companies continued to bleed in the second quarter as well. The combined loss of fuel retailers -- Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOC) -- stood at Rs 2,748.66 crore in July-September quarter.

The companies attributed their loss to erosion in the marketing margin on petrol, diesel and domestic liquefied petroleum gas (LPG). OMCs have not revised the price of petrol and diesel for the past months, despite inflated crude prices in the international market.

Overall, in the first half of the current financial year, the three government-owned OMCs have reported a cumulative loss of Rs 21,400 crore. According to analysts, OMCs are losing an estimated `per litre on petrol and Rs 10 per litre on diesel.

Market experts are of the view that if the government doesn’t come up with another relief package, the companies will have no choice but to hike the fuel price. “Tax collections have been good despite some slowdown, so alternatives could surely be explored .. but generally preferred more for LPG than for fuels,” said Gaurav Moda, India Energy Leader, EY.

Prashant Vasisht, VP and Co-Group Head at ICRA, said it is very difficult to predict when the government will come up with a new relief package. However, historically, OMCs have been aided by the government in times of large under-recoveries and these companies had to bear limited net under-recoveries.

“As these companies are important for energy needs and aid in fulfilling socio-economic objectives of the government, they have been supported by the government in the past,” said Vasisht. BPCL, which has released its Q2FY23 result on Monday (Nov 7, 2022), reported a loss of Rs 304.17 crore in Q2.

It has posted a loss of Rs 6,263.05 crore in Q1. Similarly, HPCL reported a loss of Rs 2,172.14 crore in the second quarter, and in April-June quarter it lost Rs 10,196.94 crore in Q1. IOC in its result on October 29 reported a net loss of Rs 272.35 crore for the Q2.

Down and out