OMCs Poised to Cut Petrol, Diesel Prices by Rs 510 Next Month, Easing Inflation Worries
OMCs Poised to Cut Petrol, Diesel Prices by Rs 510 Next Month, Easing Inflation Worries
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Oil Marketing Companies (OMC) are likely to slash petrol and diesel prices by Rs 5-10 next month following the release of their Q3 results, projecting net profits crossing Rs 75,000 crore.

Officials indicate that a pricing review will occur, especially for companies with margins of Rs 10 per litre, and this reduction could be passed on to consumers.

This move is anticipated to alleviate inflation concerns and play a significant role leading up to the 2024 Lok Sabha elections.

Souce familiar with the matter says, "The three oil marketing companies (OMCs) reported substantial net profits in Q1 and Q2 of FY2023-24 due to higher marketing margins on fuel sales, and this trend is expected to continue in Q3." They added, "Following the release of results by the end of this month, there is a possibility that petrol and diesel rates may see a reduction of Rs 5 to Rs 10 per litre, with a precautionary cushion for potential spikes in international oil prices. The decision will be made in consultation with stakeholders."

The combined net profit for the three companies in the first half of 2023-24 was Rs 57,091.87 crore, marking a remarkable jump of over 4,917 percent from Rs 1,137.89 for FY 2022-23.

Hindustan Petroleum Corporation Ltd (HPCL) has announced that it will disclose its Q3 results on January 27. Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Ltd (BPCL) are expected to announce their results around the same time.

Despite the Ministry of Petroleum and Natural Gas overseeing the OMCs, these firms have been permitted to adjust fuel pump prices.

With a monopoly in the domestic fuel sector, OMCs hold over 90 percent market share.

India experienced inflation in fuel prices for four consecutive months, peaking at 5.69 percent in December 2023.

OMCs had set petrol and diesel rates on April 6, 2022, while the central government lowered excise duty twice (by Rs 13 on petrol and Rs 16 on diesel) to shield consumers.

By March 2023, prices dropped to Rs 78.54, and except for two months in 2023-24 – September 2023 (Rs 93.54) and October 2023 (Rs 90.08) – they never exceeded Rs 90, contributing to substantial net profits in the first two quarters for OMCs.

A research report by Emkay Global Financial noted, "PSU OMCs have reduced domestic aviation turbine fuel (ATF) prices by 4 percent MoM for January 24 to Rs 102 per litre (in Delhi), indicating potential further price cuts."

The tax on petrol was eliminated on July 20, 2022, and on ATF from March 4, 2023.

Tax on domestic crude oil was also gradually reduced to Rs 1,700 per tonne starting Tuesday, down from Rs 23,250 per tonne when first imposed on July 1, 2022.

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