According to Moody's Investors Service, India's top fuel retailers IOC, BPCL, and HPCL collectively lost around $2.25 billion ( ₹19,000 crore) in revenue in March by keeping petrol and diesel prices unchanged despite a sharp rise in crude oil prices.
Despite crude oil prices averaging approximately $111 per barrel in the first three weeks of March, compared to $82 in early November, petrol and diesel prices remained unchanged between November 4, 2021, and March 21, 2022.
Crude oil prices in international markets have risen above $100 per barrel as a result of Russia's invasion of Ukraine. Oil prices reached a high of $140 per barrel due to supply concerns caused by the Ukraine crisis.
The government raised bulk diesel prices by ₹25 per litre last week, and aviation fuel prices have risen by 50% since January.
State-owned Indian Oil Corporation (IOC), Bharat Petroleum Corporation and Hindustan Petroleum Corporation (HPCL) on March 22 and 23 raised petrol and diesel prices by 80 paise per litre.
On the same day, cooking gas prices were raised as well. Domestic LPG cylinder prices have increased by more than ₹50 in Delhi, Mumbai, and other cities.
Moody's noted that "based on current market prices, the oil marketing corporations are currently facing a revenue loss of roughly $25 (around ₹1,900) per barrel and $24 per barrel on the sale of petrol and diesel, respectively."
If crude oil prices continue to average around $111 a barrel, the three rated entities - IOC, BPCL and HPCL - will incur a combined daily loss of around $65-70 million on the sale of petrol and diesel unless fuel prices are increased to cover the rising crude oil prices, it said.
The rating agency estimated that IOC's revenue loss would be around $1-1.1 billion, while BPCL and HPCL's revenue losses would be around $550-650 million each over the same time period.
"This loss in revenue will add to the short-term borrowings, funded with working capital lines, of the refiners until such time that crude oil prices stay at elevated levels.
Petrol and diesel prices are supposed to be revised daily to replicate the changes in crude prices, but government-owned Indian fuel retailers – Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) – had frozen rates as campaigning for assembly elections in five Indian states began.
Petrol and diesel prices were hiked by 80 paise a litre each on Friday, the third increase in four days.