A fuel pump in India.
Credit: iStock Photo
Oil companies may reduce petrol and diesel prices next month after releasing their Q3 results which would show their net profits cross Rs 75,000 crore, according to a report by Hindustan Times.
Officials said that a review of the pricing will take place with the companies that are sitting on margins of Rs 10 per litre which could be passed onto the customers.
The move is expected to soothe inflation and play a major role ahead of the 2024 Lok Sabha elections.
People, familiar with the matter, told the publication, "Due to higher marketing margin on sale of fuels, the three OMCs (oil marketing companies) posted significant net profit in Q1 and Q2 (of FY2023-24) and the trend will continue in Q3."
They added, "After the results by the end of this month, they may consider reducing petrol and diesel rates between Rs 5 and Rs 10 a litre, keeping some cushion for future spike in international oil prices. A decision will be taken by the companies in consultations with their stakeholders."
The combined net profit of the three companies in the first half of 2023-24 was Rs 57,091.87 crore, which saw a profit jump of over 4,917 per cent from Rs 1,137.89 for FY 2022-23.
Hindustan Petroleum Corporation Ltd (HPCL) had announced that it would declare its Q3 results on January 27.
Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Ltd (BPCL) are expected to make announcements about their results around the same time.
Though the Ministry of Petroleum and Natural Gas controls the OMCs, it has permitted the three firms to change pump prices of fuel.
OMCs have a monopoly in the domestic fuel sector with over 90 per cent market share.
India saw inflation in the fuel prices for four months at a stretch reaching a high of 5.69 per cent in December 2023.
The OMCs had fixed petrol and diesel rates on April 6, 2022, while the central government reduced the excise duty twice (by Rs 13 on petrol and Rs 16 on diesel) to protect the consumers.
By March 2023 the prices fell to Rs 78.54 and barring two months of 2023-24 – September 2023 (Rs 93.54) and October 2023 (Rs 90.08) – it never crossed up Rs 90, helping OMCs make good net profits in the first two quarters.
A research report by Emkay Global Financial Services said, "PSU OMCs have lowered domestic aviation turbine fuel (ATF) price by 4 per cent MoM for January 24 to Rs 102 per litre (in Delhi), thereby pointing to further price cuts", as per HT.
The tax on petrol was removed since July 20, 2022, and on ATF from March 4, 2023.
Tax on domestic crude oil was also reduced to Rs 1,700 per tonne since Tuesday, a gradual reduction from Rs 23,250 per tonne when it was first imposed on July 1, 2022.