State-Owned Oil Firms Lose Over Rs 1 Lakh Cr in 10 Weeks, Fuel Price Hike Seen Inevitable

State-owned oil marketing companies (OMCs) — Indian Oil Corporation, Bharat Petroleum Corporation Limited, and Hindustan Petroleum Corporation Limited — have incurred losses exceeding Rs 1 lakh crore over the past 10 weeks amid surging global crude oil prices linked to the Middle East conflict, while maintaining static domestic fuel prices. The firms are currently facing combined daily under-recoveries of Rs 1,600 to Rs 1,700 crore, according to government sources.

Petrol and diesel retail prices in India have remained unchanged at Rs 94.77 per litre and Rs 87.67 per litre, levels last seen nearly two years ago, despite a sharp rise in import costs. Domestic LPG prices were raised by Rs 60 per cylinder in March but remain below cost-recovery levels. India's crude oil imports, 40% of which are affected by the Middle East conflict, have contributed to elevated input costs, with 90% of LPG and 65% of natural gas imports also impacted.

The OMCs have maintained uninterrupted fuel supply despite import disruptions, but sources warn their financial health is under strain, potentially requiring higher working capital borrowings if high crude prices persist. Some capital expenditure timelines may need reprioritisation, officials said. The government has cut excise duties — petrol duty reduced to Rs 3 per litre from Rs 13 and diesel duty to zero from Rs 10 — absorbing a revenue loss of about Rs 14,000 crore per month.

A decision on raising petrol and diesel prices is now viewed as a political imperative, with officials stating a hike has become unavoidable, though the timing and extent remain under government review. Strategic investments in refining, ethanol blending, biofuels, and energy infrastructure will continue with state support.

The government is expected to assess the fiscal and economic impact before making a final decision on fuel pricing; no timeline has been announced for a potential revision.