Oil PSUs suffer ₹30,000 cr under-recoveries a month

State-run oil marketing companies are incurring combined under-recoveries of about ₹30,000 crore per month on petrol, diesel and LPG, a petroleum ministry official said on Friday. Indian Oil, Hindustan Petroleum and Bharat Petroleum are selling fuels in the domestic market below international benchmark rates, which have surged following the outbreak of the Iran war.

Sujata Sharma, a joint secretary at the petroleum ministry, did not provide a fuel-wise or month-wise break-up.

Under-recovery refers to the gap between domestic retail prices and prevailing global benchmark rates for fuels. For companies, however, this does not necessarily translate into a cash loss, which depends on crude procurement costs and domestic selling prices.


Crude procurement costs have also surged due to the war, likely putting pressure on the earnings of oil marketing companies as prices of regular petrol and diesel remain unchanged. Shares of Indian Oil, HPCL and BPCL have fallen 12-23% since the outbreak of the war on February 28.

The companies have raised prices only selectively. Rates of premium petrol, bulk diesel, commercial LPG and aviation turbine fuel (ATF) for international flights have been sharply increased in line with global trends.

However, retail prices of regular petrol and diesel have remained unchanged. ATF prices for domestic airlines have been only partially increased, while LPG prices have gone up by ₹60 per 14.2-kg cylinder.