IOC reports quarterly loss; sold diesel at average loss of Rs14 per liter; petrol at average loss of Rs10 per liter

1 Aug 2022 , 08:18 AM

The largest oil refining and fuel retailing corporation in India, Indian Oil Corporation, recorded its first quarterly net loss in more than two years during the April—June quarter after selling gasoline and diesel at a loss of Rs10 per litre and Rs14 per litre, respectively.

IOC reported a net loss of Rs1,992.53 crore in the April—June quarter as opposed to a net profit of Rs5,941.37 crore and Rs6,021.9 crore in the corresponding January—March quarters, respectively.

IOC and other state-owned companies Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd maintained prices on hold despite an increase in input costs, despite the fact that fuel retailers are required to adjust petrol and diesel prices daily in accordance with cost.

The average price of the crude oil that India imports are $109 per barrel, but the retail pump prices are closer to $85-86 per barrel.

This quarter’s deficit characterizes the first in more than two years. From January to March 2020, the company recorded a net loss, although the loss was due to inventory losses from processing more expensive oil.

Oil companies usually use import parity rates to compute a refinery gate price. However, losses are logged if the company sells it for less than import parity.

State-run fuel sellers must daily synchronise prices with international costs. However, they have uncommonly frozen pricing prior to important elections.

Prior to the assembly elections in states like Uttar Pradesh last year, IOC, BPCL, and HPCL halted adjusting rates. When the 137-day price freeze came to an end in late March, prices were increased by Rs10 per litre before a new round of freezing took effect in early April.

This is correct even though supply worries as a result of Russia’s invasion of Ukraine led to a spike in global oil prices to multi-year highs.

In May, the government reduced the excise charge on gasoline and diesel, which was then passed through to customers rather than utilized to offset growing losses on the sale of the two fuels.