Moody's Investors Service said on Monday that a Rs 220 billion one-time grant from the government to the three oil marketing companies would cover their losses on sales of domestic liquefied petroleum gas (LPG). However, they still lose money on sales of petrol and diesel.

Last week, the Central government gave the Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) a grant to cover losses on domestic LPG sales from June 2020 to June 2022.

Moody's says that even with the grant, the refiners' earnings will be low in FY23. This is because these companies lost a lot of money selling petrol and diesel in the first half, and they haven't been compensated yet. Moody's said, "We think that state-owned refining and marketing companies lost between USD 6.5 billion and USD 7 billion in sales of petrol and diesel from November 2021 to August 2022."

Moody's said, "We think Indian Oil Corp will lose between USD 3 billion and USD 3.2 billion in sales of petrol and diesel, while BPCL and HPCL will lose between USD 1.6 billion and USD 1.9 billion." After restrictions on movement were lifted and the Russia-Ukraine war started, crude oil prices went up a lot. They averaged around USD 104 a barrel (bbl) from January to August 2022, while they were around USD 80/bbl in November 2021.

Moody's said that the state-owned refiners lost money because the selling prices of petrol and diesel in India did not rise at the same rate as the costs of feedstock and the prices of petrol and diesel on the international market.

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