State Oil Firms Face ₹1.7 Lakh Crore Loss Insulating India from Fuel Price Surge

India's state-owned oil marketing companies (OMCs) have incurred under-recoveries exceeding ₹1 lakh crore over the past 10 weeks by maintaining petrol, diesel, and LPG prices below cost, insulating consumers from global energy shocks following the West Asia conflict. The daily loss stands at ₹1,600-1,700 crore, with Indian Oil Corporation (IOC), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL) absorbing the gap despite a 50% surge in crude oil prices.

Petrol and diesel are still priced at ₹94.77 and ₹87.67 per litre, unchanged for two years, while LPG prices remain below actual costs despite a March hike of ₹60 per cylinder. The OMCs rely solely on fuel sales to fund crude oil imports, infrastructure, and distribution networks, forcing them to increase borrowing to meet working capital needs as under-recoveries mount.

The government reduced excise duties—cutting petrol duty from ₹13 to ₹3 per litre and diesel to zero—absorbing ₹14,000 crore in monthly revenue losses. While this eased some pressure, OMCs now face financial stress that could delay investments in refining, pipelines, strategic reserves, and clean fuel initiatives.

Officials say a fuel price increase has become inevitable, but the timing and extent will be a political decision by the government. The court will resume hearing on Tuesday.