OMCs make Rs 1.90/litre margin on diesel

The gains on diesel sales are a result of continued monthly price rises and an ongoing slump in global crude oil prices

The gains registered by oil marketing companies (OMCs) on diesel sales have jumped five times to Rs 1.90 a litre from 35 paise a litre a fortnight ago.

The gains are a result of continued monthly price rises since January 2013 and an ongoing slump in global crude oil prices.

“The overrecovery on high speed diesel (HSD) applicable for the first fortnight of October, effective October 1, is now Rs 1.90 a litre. The over-recovery (profit) was Rs 0.35 a litre during the second fortnight of September,” the petroleum ministry stated.

 

OMCs’ underrecoveries (losses) on Public Distribution System (PDS) kerosene have come down to Rs 31.22 a litre from Rs 32.67 a litre a fortnight ago. Losses on domestic liquefied petroleum gas (LPG) have declined to Rs 405 a cylinder, compared to Rs 428 a cylinder last month.

The Indian basket of crude oil prices had dropped from a high of $115 a barrel in June this year to $95 a barrel on Tuesday. A demand cut from the largest consumer, China, coupled with an over-supply in the global market has driven crude rates southwards.

The previous United Progressive Alliance government had decided in January 2013 to decontrol diesel prices in phases through a monthly price increase of 50 paise a litre until domestic rates achieved market parity. Since then, prices have been increased by a cumulative Rs 11.81 a litre, in 19 instalments.

 

Despite the over-recovery on diesel sales, the OMCs on Tuesday refrained from announcing any price cut, in view of the coming Assembly elections in Haryana and Maharashtra and a pending decision on diesel decontrol.

The OMCs are now incurring a combined daily underrecovery of Rs 156 crore on the sale of PDS kerosene and domestic LPG. This is lower than the Rs 190 crore a day of underrecoveries in the previous fortnight. The oil firms registered total under recoveries of Rs 28,691 crore for the first quarter of the current financial year. The losses were Rs 139,869 crore in FY14.