OMC losses cross ₹1 lakh crore in 10 weeks: PTI

What has pushed oil marketing companies into record under-recoveries

State-owned oil marketing companies are absorbing sharply higher losses to keep retail fuel prices in India unchanged despite a global energy shock, PTI reported citing sources. The combined under-recovery on petrol, diesel and LPG is estimated at about ₹1,600 crore to ₹1,700 crore a day. Over the past 10 weeks, those under-recoveries have crossed well over ₹100,000 crore, according to the report. The financial strain is drawing attention because these losses are being incurred while maintaining uninterrupted supplies. The key firms involved are Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL).

What the PTI report said and who is affected

PTI said two sources with direct knowledge of the matter described the under-recoveries as “record high” across petrol, diesel and cooking gas LPG. The report linked the spike in losses to the period after a war broke out in West Asia around 10 weeks ago. It said the three OMCs kept fuel supplies uninterrupted and did not pass through steep increases to consumers. In contrast, the report noted that several global energy systems either imposed rationing or passed on sharp price rises. The immediate impact is being borne by the public sector retailers through a widening gap between costs and retail selling prices.

Understanding “under-recovery” and why it matters

Under-recovery refers to the difference between the cost of fuel and the retail selling price. When costs rise faster than pump prices, under-recoveries increase and squeeze cash flows. In this case, the report said petrol, diesel and LPG were being sold at rates “well below cost.” That creates a cumulative loss that can build rapidly when volumes remain steady or rise. PTI also flagged that the mounting losses raise questions about how long these firms can bear the burden without financial stress becoming more visible.

Retail prices mentioned in the report

The report said petrol and diesel retail prices in India have remained unchanged at nearly two-year-old levels of ₹94.77 per litre and ₹87.67 per litre, respectively. It also noted that domestic LPG prices were increased by ₹60 per cylinder in March. Even after that increase, the report said LPG prices remain below actual cost levels. The key point is that retail stability has been maintained even as global crude prices have moved up, widening the cost-to-price gap for OMCs.

Supply continuity amid disruptions and demand spikes

PTI said the OMCs ensured uninterrupted supplies even when demand spiked due to panic buying. It also cited disruptions in imports linked to the Middle East conflict. The report stated that the disruption affected nearly 40% of India’s crude oil imports, 90% of LPG imports and 65% of natural gas imports. Despite those pressures, the three firms continued to keep supply lines running. That operational response reduced the risk of shortages in the domestic market, but it also meant the cost shock was absorbed on balance sheets rather than being reflected at retail.

Government intervention through excise duty reductions

The report said the government intervened by cutting excise duties to absorb part of the burden. It specifically mentioned the special additional excise duty on petrol being cut to ₹3 per litre from ₹13. It also said excise duty on diesel was reduced to zero from ₹10. PTI added that the government is taking a revenue hit of ₹14,000 crore a month due to these excise duty reductions. This intervention lowers the tax component in retail pricing, helping contain pump prices even when underlying costs rise.

Working capital pressure and borrowing needs

PTI said that after 10 weeks of insulating the market, the cost is now visible and the OMCs may have to borrow more to meet working capital requirements. The report linked this to the need to buy crude oil and fund day-to-day operations while selling key fuels below cost. Higher borrowing to fund working capital can add interest costs and further tighten profitability. The same dynamic can also constrain the ability of firms to absorb prolonged shocks without some form of pricing action or compensation.

Market impact: what the numbers imply for OMC finances

The most direct market impact described in the report is on the financial health of IOC, BPCL and HPCL, as under-recoveries accumulate daily. PTI put the current combined under-recovery at ₹1,600 crore to ₹1,700 crore per day, which compounds quickly over weeks. It also reported that India’s top fuel retailers lost around ₹19,000 crore in revenue between November and March due to price freezes even as crude prices surged. Separately, the government’s excise reduction is described as a ₹14,000 crore a month hit, highlighting that the burden is being shared between public finances and PSU balance sheets. The report also carried a line that a fuel price hike was seen as inevitable, with the government to decide the timing, indicating that the present approach may not be costless to sustain.

Key facts at a glance

Analysis: why this episode matters for India’s fuel pricing debate

The PTI report highlights the trade-off between price stability for consumers and financial stability for fuel retailers. Selling below cost can keep inflationary pressures in check in the short term, but it shifts the shock into under-recoveries that must be funded. The report’s reference to higher borrowing needs underscores that the issue is not only accounting losses, but also liquidity and working capital management. Meanwhile, the excise duty cuts show a fiscal channel being used to soften the pass-through. With import disruptions and elevated global prices cited in the report, the episode also underlines how geopolitical events can transmit quickly into domestic energy economics.

Conclusion

PTI’s report puts the combined under-recoveries of IOC, BPCL and HPCL at about ₹1,600-1,700 crore a day, taking the 10-week total to well over ₹100,000 crore, even as retail prices and supplies remain steady. It also notes the government’s ₹14,000 crore monthly hit from excise duty reductions. The next steps, as flagged in the report, hinge on how long the current pricing approach can be maintained and when any policy or pricing decisions are taken.