OMC losses: ₹30,000 crore monthly as fuel prices hold

What changed for India’s oil marketers

India’s state-run oil marketing companies are absorbing losses of around ₹30,000 crore every month as retail prices of petrol, diesel and LPG remain unchanged despite a sharp rise in global energy costs. The under-recoveries are being borne by Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), according to government officials and sources cited in PTI reports. At an inter-ministerial briefing in New Delhi on the West Asia crisis, Sujata Sharma, Joint Secretary in the Ministry of Petroleum and Natural Gas (MoPNG), flagged the scale of the pressure on oil marketers.

The government’s approach so far has been to keep retail prices stable for consumers, even as input costs have surged. Sharma said the “endeavour” has been to avoid a price increase, while acknowledging that this has hit the finances of OMCs. Officials also said fuel supply has remained uninterrupted, with no rationing or shortage.

Under-recoveries explained in plain terms

Under-recovery is the gap between the cost of imported crude and other inputs and the price realised from selling fuels at the pump or through LPG cylinders. When international prices rise and retail prices do not adjust, the difference shows up as losses for marketing companies.

In the current spell, OMCs are buying crude, LPG and natural gas at elevated levels and selling domestically at lower prices to limit the pass-through to consumers. Sharma said OMCs are facing under-recoveries across petrol, diesel and LPG.

The scale: per litre losses and daily burn

Sources cited in reports estimated daily under-recoveries during April at about ₹18 per litre on petrol and ₹25 per litre on diesel. These per litre gaps translate into large daily losses for OMCs, estimated at about ₹700-1,000 crore a day in one account. Another set of reported estimates put the daily loss at roughly ₹600-700 crore a day, reflecting variation in assumptions and timing.

Even at the lower end of those daily ranges, the monthly impact remains steep when aggregated across nationwide fuel sales. Officials and sources put the monthly under-recovery figure at about ₹30,000 crore for the three state-run marketing companies.

Why global energy prices are driving the stress

Officials linked the pressure to disruptions and heightened risk in global energy markets amid the West Asia conflict and Strait of Hormuz shipping concerns. One set of reports said crude prices climbed from about $10 per barrel two months ago to nearly $120 per barrel, lifting import costs for India.

The same reports said the conflict disrupted India’s import flows to a significant extent: 40% of crude oil, 90% of LPG and 65% of natural gas. Despite that, officials said supplies have continued without rationing or mobility restrictions over the last 10 weeks.

Retail prices held steady despite the spike

Retail prices have remained unchanged since February 28, according to the reports. The cited pump prices were ₹94.77 per litre for petrol and ₹87.67 per litre for diesel. Officials emphasised that there has been no rationing and no supply disruption even as global markets faced turmoil.

This combination of stable retail prices and rising input costs is the core reason under-recoveries have widened sharply. Sources also said the spike and the decision to shield consumers have put pressure on OMC balance sheets and refining margins.

Government support: excise duty cuts and fiscal cost

The Centre reduced excise duties to reduce the immediate burden on OMCs, with a stated fiscal cost. Sharma said the government has taken a revenue hit of about ₹14,000 crore a month due to the excise reductions.

As part of the changes, the special additional excise duty on petrol was cut to ₹3 per litre from ₹13 per litre. Excise duty on diesel was reduced to zero from ₹10 per litre. Sources said without these excise cuts, under-recoveries would have risen to nearly ₹62,500 crore.

Officials also estimated the Centre’s “effective absorption” at peak crude prices at around ₹24 per litre for petrol and ₹30 per litre for diesel, reflecting the combined impact of tax actions and other support.

Key numbers at a glance

What it means for IOC, BPCL and HPCL

The immediate risk is financial strain from sustained under-recoveries, which can weaken cash flows and increase borrowing requirements. Reports noted that prolonged pressure could affect OMC balance sheets and borrowing needs. At the same time, sources said investments related to refining expansion, energy security, ethanol blending and transition fuels would continue with government backing.

In the near term, the key operational achievement highlighted by officials has been uninterrupted supply, even as the input shock hit crude, LPG and natural gas procurement costs. The trade-off is visible in marketing losses that are building each month.

What it could mean for consumers and fuel pricing

Officials have not committed to how long retail prices will remain unchanged. Sharma declined to say whether prices would continue to hold, while reiterating that the government’s effort has been to avoid a price increase so far.

Other reports referenced expectations of a price hike, including a mention that the government was weighing a ₹4-5 per litre increase, and a separate report citing sources that petrol and diesel prices could be hiked before May 15. These updates were framed as developing, and no official decision was confirmed in the cited material.

Market impact and why investors are watching

For markets, the episode matters because it shifts the earnings and balance sheet outlook for the downstream segment when retail prices are held below economic cost. Under-recoveries of ₹30,000 crore a month are large enough to dominate quarterly marketing performance for OMCs if sustained, especially when combined with pressure on refining margins referenced by sources.

At the policy level, the numbers also highlight the fiscal-versus-consumer trade-off. With the Centre already absorbing around ₹14,000 crore a month of revenue loss from excise cuts, the remaining gap is being absorbed by OMCs. That split is central to how long price stability can be maintained without a further policy change.

Conclusion

India’s three state-run oil marketing companies are carrying monthly under-recoveries of about ₹30,000 crore while pump prices remain unchanged, even after excise duty reductions that cost the Centre about ₹14,000 crore a month. Officials have stressed uninterrupted supply and no rationing, but have not confirmed whether retail prices will stay on hold. The next key signals for investors and consumers are any further tax changes or an official decision on retail price revisions, as reported discussions around a possible hike continue to develop.