Indian consumers could soon see relief at the pump, with state-owned oil companies considering a reduction in petrol and diesel prices. Record profits expected in the December quarter, potentially reaching Rs 75,000 crore, are fueling speculation about a price cut. This move by companies could help control inflation, which has been a major concern for the country.
Government fuel retailers haven't adjusted petrol and diesel prices since April 2022, but now they are hinting at a price review. Officials suggest that oil marketing companies (OMCs) currently enjoy a profit margin of Rs 10 per liter, which could be partially passed on to consumers.
Record Profits for Oil Companies
Sources indicate that the three OMCs have posted robust profits in the first half of FY 2023-24, registering a remarkable 4917% jump compared to the previous financial year. According to information sourced by Hindustan Times, "Higher marketing margins on petrol and diesel sales have led to substantial profits for the three OMCs in the first and second quarters of FY 2023-24, and this trend is expected to continue in the third quarter. Therefore, companies may consider reducing petrol and diesel prices by Rs 5 to 10 per liter by the end of this month."
Hindustan Petroleum Corporation Limited (HPCL) reported a consolidated net profit of Rs 5826.96 crore for the July-September quarter, driven by lower crude oil prices and higher Gross Refining Margin (GRM). Similarly, Bharat Petroleum Corporation Limited (BPCL) posted a consolidated net profit of Rs 8244 crore in the September 2023 quarter.
Central Government's Role
The central government had reduced taxes on petrol and diesel in 2022, leading to a temporary price decline. However, rising crude oil prices subsequently reversed this trend. With crude oil prices now dipping again, the government may consider another round of tax cuts for further price reduction.
Any such move by the government would offer significant relief to consumers and contribute to controlling inflation.