Now Reading: India state fuel retailers lose $1.9bn shielding customers
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India state fuel retailers lose $1.9bn shielding customers
India's state-owned fuel retailers, which control about 90% of the market, have reported a combined net loss of Rs 18,149 crore ($1.90 billion) in the April-June quarter. The losses were incurred as…
India's state-owned fuel retailers, which control about 90% of the market, have reported a combined net loss of Rs 18,149 crore ($1.90 billion) in the April-June quarter. The losses were incurred as the companies shielded customers from the full impact of rising global energy prices driven by the U.S.-Iran conflict.
The three major state-run oil marketing companies, Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation, have not raised retail petrol and diesel prices since early April, despite a sharp increase in crude oil costs. The government has been under pressure to keep fuel prices stable ahead of key state elections.
Indian Opinion Analysis
The Rs 18,149 crore loss is a direct result of the government's policy to hold down retail fuel prices in an election year, a strategy that transfers the burden from consumers to the state's balance sheet. This is not the first such instance: similar under-recoveries occurred in 2012-13, when the government compensated oil companies through subsidies. However, this time, there is no explicit subsidy mechanism, leaving the companies to absorb the hit, which will strain their working capital and could force borrowing. The next key signal to watch is whether the government allows a price hike after the monsoon session of parliament, or if it introduces a formal compensation package before the next quarterly results.
Source: asia.nikkei.com
This story was synthesised by AI from the source linked above.
