Just days after announcing a standard Rs 3 per litre price hikes in diesel and petrol, Indian oil marketing companies have introduced another hike of 90 paise on Tuesday morning, taking the total price hike in fuel prices to Rs 3.9 per litre.
This is yet another significant move by the Indian OMCs, who have been bearing the brunt of elevated crude prices that have destabilised global energy markets, leading to widespread losses for companies such as Hindustan Petroleum (HPCL), Bharat Petroleum (BPCL) and Indian Oil Corporation (IOCL).
Why the fuel price hike?
Earlier in the month, comments from Petroleum Minister Hardeep Singh Puri suggested that Indian OMCs are incurring lossesof up to Rs 1 - 1.2 lakh crore in Q1FY27 in the midst of the West Asia conflict.
This translates to a daily cumulative loss of Rs 1,100 - 1,300 crore per day that these OMCs are absorbing, making long-term sustenance effectively impossible.
The fuel price hikes are seen as a way to cushion the blow, as HPCL, BPCL and IOCL look to lower their losses by passing on some of the cost to the end consumer.
How the latest hike will impact OMCs
The latest price hike of 90 paise across petrol and diesel will add to the existing Rs 3 per litre that was already announced four days ago, taking the total hike to Rs 3.9 per litre.
As per various brokerages, every half a rupee per litre increase in fuel marketing margins is estimated to lift Ebitda by 7% for IOCL, 8% for BPCL and 11% for HPCL.
Now, the total fuel consumed in India stands at 463 million litres per day, with OMCs having a 90% market share in the space. This means a total of 417 million litres per day of petrol/diesel is consumed in pumps owned by HPCL, BPCL and IOCL.
Taking that into account, a 90 paise hike would help these OMCs recoup Rs 38 crore per day. If we combine the two hikes, these companies will be able to recoup Rs 163 crore per day, which is roughly 12.5-14.8% of the estimated daily loss they are bearing.
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