According to the information, Nayara Energy, one of India’s largest private fuel companies, on Thursday increased the prices of petrol by Rs 5 per liter and diesel by Rs 3 per liter. The company has passed on some of the recent increase in global oil prices following the war in the Middle East to its customers. Fuel marketing companies in India are under pressure. Despite global crude oil prices rising by nearly 50 per cent since February 28, retail petrol and diesel prices have remained stable. On February 28 itself, America and Israel launched military attacks against Iran, in response to which Tehran also took strong retaliatory action.
Nayara Energy, which operates 6,967 of India’s total 102,075 petrol pumps, has decided to pass on some part of the increase in input costs to customers, two sources with direct knowledge of the matter said. The company spokesperson did not immediately comment on this news. However, Reliance Industries and BP Plc’s joint fuel retail venture, Jio-bp—which has 2,185 outlets—has not yet increased prices despite incurring huge losses on petrol and diesel sales. Government-owned fuel retailer companies, which account for about 90 percent of the market, are still keeping prices stable.
Increase in prices of petrol and diesel
Sources said that while Naira, majority-owned by Russian company Rosneft, has increased the price of petrol by Rs 5 per liter and diesel by Rs 3 per liter, the effective price increase varies from state to state. This difference depends on the rate of local taxes like VAT. At some places, this increase in the price of petrol has reached Rs 5.30 per liter. According to sources, private fuel retailers in India do not receive any compensation from the government to compensate for the losses incurred due to stopping the price increase. In contrast, public sector companies receive government support to act as “good corporate citizens”. Sources further said that due to increasing losses they have no other option but to increase retail prices.
No change since 4 years
Retail petrol and diesel prices remain stable from April 2022. Meanwhile, state-owned companies—Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL)—bear losses when crude prices are high, and make profits when prices are low. Last week, these three retailers increased the price of premium or high-grade petrol by Rs 2 per litre. Besides, the rate of bulk diesel sold to industrial users was also increased by about Rs 22 per liter. However, there has been no change in the prices of normal petrol and diesel.
How much are the prices in Delhi?
The price of premium 95-octane petrol in Delhi has been increased from Rs 99.89 per liter to Rs 101.89 per liter. With this, wholesale or industrial diesel prices in the national capital were increased from Rs 87.67 per liter to Rs 109.59 per liter. Earlier this month, due to the intensification of the Iran war, international oil prices had reached $119 per barrel, after which they fell to around $100 per barrel. The price of one liter of normal petrol in Delhi still remains at Rs 94.77, while diesel of the same grade is available at Rs 87.67 per litre.
The octane rating of normal petrol is usually 91-92. It is suitable for standard engines and provides adequate performance for everyday driving. On the other hand, premium petrol has an octane rating of 95-98, making it ideal for high-performance or high-compression engines.
88 percent dependent on imports
The government’s stance has been that petrol and diesel are deregulated products. Whose prices are decided independently by oil marketing companies. India imports 88 percent of its crude oil needs and about half of its natural gas needs. This import mainly takes place through the Strait of Hormuz. Following US and Israeli attacks on the Iranian government, military, and nuclear facilities, Iran warned ships to avoid the strait; As a result, insurance companies also stopped providing coverage, effectively bringing tanker movements to a halt.
In June, prices had increased to $ 119 per barrel. In 2022, after Russia attacks Ukraine. That year, oil companies made nominal profits, but in FY24, they made a record profit of Rs 81,000 crore, which helped offset previous losses in margins. This year, these three companies have earned a profit of Rs 23,743 crore in the December quarter alone.