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India maintains constant prices for petrol and diesel even though the prices of crude oil globally are rising.
The state-owned oil companies in India are facing a tough financial situation since the Indian government is maintaining constant prices for diesel and petrol in India even though the prices of energy resources globally are rising. As per a report published by the Ministry of Petroleum and Natural Gas, the under-recoveries for state-owned oil companies currently stand at ₹24.40 per litre of petrol and ₹104.99 per litre of diesel. The current prices of diesel and petrol are Rs 94.77/liter for diesel and Rs 87.67/liter for petrol in Delhi. If the prices were set equal to international market prices for diesel and petrol, then the price for a liter of petrol would be Rs 120, and for diesel, it would be Rs 190.
The government’s move to freeze fuel prices comes in the wake of the impact of bold rising global crude oil prices in India, which is mainly caused by tensions in West Asia. Global crude oil prices have risen by nearly 100 percent in the last one month. In spite of all this, the government does not want to pass on the impact of high fuel prices to consumers. On the other hand, premium fuel grades are seeing selective increases, which are a reflection of bold high-octane petrol price hike India XP100 XP95 impact. These are small volumes of fuel but are in demand by those who want better performance from their cars.
This move by the government reflects a bold government fuel price control strategy in India under recoveries of OMC losses, where the financial burden will be on oil companies rather than consumers. This move by the government will not only protect consumers from inflation but will also raise questions regarding the financial stability of OMCs. Business Honor is of the view that a stable fuel price strategy will continue to be a strain on oil marketing companies.
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