OMCS lost RS 19,000 crore due to freeze on fuel price
India's top fuel retailers IOC, BPCL and HPCL have together lost around USD 2.25 billion (Rs 19,000 crore) in revenue between November and March by keeping petrol and diesel prices unchanged despite a sharp rise in crude oil prices, Moody's Investors Service said on Thursday
Petrol and diesel prices remained unchanged between November 4, 2021, and March 21 despite prices of crude oil (raw material for producing fuel) averaging around USD 111 per barrel in the first three weeks of March compared to around USD 82 in early November
.State-owned Indian Oil Corporation (IOC), Bharat Petroleum Corporation and Hindustan Petroleum Corporation (HPCL) on March 22 and 23 raised petrol and diesel prices by 80 paise per litre each but paused the increase on Thursday "Based on current market prices, the oil marketing companies are currently incurring a revenue loss of around USD 25 (over Rs 1,900) per barrel and USD 24 per barrel on sale of petrol and diesel, respectively," Moody's said in a report.
If crude oil prices continue to average around USD 111 a barrel, the three. rated entities IOC, BPCL and HPCLwill incur a combined daily loss of around USD 65-70 million on the sale of petrol and diesel unless fuel prices are increased to cover the rising crude oil prices, it said.
"Based on our estimates of average sales volume between November and first three weeks of March, the stateowned refining and marketing companies together have lost around USD 2.25 billion in revenue on petrol and diesel sales," Moody's said.
.This equates to around 20 per cent of the combined FY2021 EBITDA for the three entities.
The rating agency estimated that IOC's revenue loss to be around USD11.1 billion while that of BPCL and HPCL to be about USD 550-650 million each over the same period.
"This loss in revenue will add to the short term borrowings, funded with working capital lines, of the refiners until such time that crude oil prices stay at elevated levels.
"Over time, the companies might be able to make up for some of these losses if oil prices come down," it added.
