OMCs recovered losses from 2-year freeze on fuel rates with combined profit of ₹69,000 crore in FY24

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Hindustan Petroleum Corp Ltd (HPCL) posted a combined net profit of ₹69,000 crore in the current financial year till the October-December quarter (Q3FY24). The OMCs have recouped losses registered in 2022 over frozen retail prices of petrol, diesel rates after international crude oil prices soared to a 14-year mark with Brent hitting $140 per barrel in March 2022 due to the Russia-Ukraine war-led spike.

Also Read: Oil market oversupplied with record-high US output, Brent seen at $87-$92 for 2024: ShareKhan's Mohammed Imran The state-run refiners registered a combined net loss of ₹21,201.18 crore during April-September 2022 despite accounting for ₹22,000 crore announced but-not-paid liquified petroleum gas (LPG) subsidy for the previous two years. The fuel price freeze that began on April 6, 2022, had a loss as high as ₹17.4 a= per litre of petrol and ₹27.7 per litre of diesel for the week ended June 24, 2022.

However, subsequent softening led to losses being eliminated. The three firms had a margin of ₹11 per litre on petrol and a loss of ₹2-3 per litre on diesel.

A subsequent softening of international oil prices and the government giving out LPG subsidies supported IOC and BPCL to report annualised profit for 2022-23 (April 2022 to March 2023), however, HPCL was in the red. The three oil majors, which control roughly 90 per cent of India's fuel market, had 'voluntarily' not changed petrol, diesel and cooking gas or LPG prices for almost two years, resulting in losses when input costs were higher and profits when raw material prices were lower.