Prices of petrol and diesel in India are unlikely to see a cut anytime soon as oil marketing companies have to recover accumulated losses to the tune of Rs 18,000 crore due to high crude prices in earlier quarters, government officials told CNBC-TV18 on condition of anonymity on Friday.

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As crude prices went down following the bank collapses in the US, including Silicon Valley Bank, there were expectations that the prices of petrol and diesel would see a reduction.

However, government sources told CNBC-TV18 that it may take a long time for the oil marketing companies to recoup losses worth over Rs 18,000 crore, dismissing possibility of a price cut at this stage.

In response to a question raised in parliament , the Petroleum Ministry had on Thursday said: “While crude oil price (Indian basket) in rupee per barrel terms has increased by 23% from December 2021 to March 2023, increase in Retail Selling Price of Petrol and Diesel at Delhi has only been 1.08% and 3.40% respectively."

It went on to add, “Prices of Petrol and Diesel have not been increased by public sector Oil Marketing Companies (OMCs) since 6th April 2022, despite record high international prices. The three Public Sector OMCs viz. IOCL, BPCL and HPCL have booked a combined loss of Rs 18,622 crore during April 2022 to December 2022.”

For the current quarter of the financial, OMCs are likely to “scrape through” on the back of decline in crude prices and no under recoveries on LPG and petrol positively impacting their bottom lines .

From the third quarter, OMCs have started showing some profits after bleeding in the first half of FY23 with losses touching almost Rs 22,000cr.

The Petroleum Ministry had pitched for cash compensation from the Finance Ministry on forex and fuel losses of OMCs, but were compensated only for LPG losses as those prices are administered by the government.

Some govt sources are also indicating crude oil prices will need to sustain at $70/bbl or less for the freeze on petrol, diesel prices to get lifted. Indian crude oil basket as on March 16 is at $73.86 per barrel.

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India slashes windfall tax on crude petroleum, diesel and aviation fuel

(Edited by : Pradeep John)