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Oil Companies Minting Profits As The Fuel Prices Rise In The Country

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NEW DELHI: The general public is outraged by the unexpected increase in oil prices in the country in the last 6 months. Petrol prices have crossed the century in many parts of the country. But in such a situation, if anyone is benefiting, then they are oil marketing companies.

Oil companies are making the most of the current situation, consolidating their margins on petrol and diesel sales and increasing profits. At the current historic high of fuel prices in the country, the margin charged by oil marketing companies on retail sale of petrol and diesel has touched an all-time high of Rs 3 per litre.

This means that while rising fuel prices leave a huge hole in the consumer’s pocket, companies are boosting their earnings and making decent profits in the current difficult environment caused by the COVID-19 pandemic.

According to a research report by ICICI Direct, all oil marketing companies are expected to consolidate their earnings in the April-June quarter of FY 22 on the back of rising marketing margins and better gross refining margins.

According to a brokerage report, privatization-bound BPCL expects net profit of Rs 2,307.7 crore, down 80.7 per cent quarter-on-quarter, as the company reported exceptional profit of Rs 6,993 crore in the first quarter of this year.

Similarly, HPCL expects to report a strong profit of Rs 1,520.7 crore in the first quarter. While it is down 49.6 per cent quarter-on-quarter, it is still very good, considering that the first quarter also saw the most devastating phase of the Covid virus, which disrupted economic activity and, as a result, fuel marketing volumes declined. .

With respect to IOC, its profit PAT is estimated at Rs 5,480.3 crore, down 37.6 per cent quarter-on-quarter, but the company will improve profit during the quarter due to increase in marketing margins.

The benefit is coming to all OMCs after regular revision in the retail price of petrol and diesel since the beginning of the financial year on April 1. Since then, the pump price of petrol has increased by up to Rs 11 per liter, while that of diesel has been hiked by up to Rs 9 per liter from April 1.

According to analysts, this may hurt fuel consumers, but it has pushed up the marketing margin for OMCs by around Rs 3 per litre. This means that companies are getting more profit than expected.

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I am the multimedia producer for News Indian Live, based in Hong Kong. Previously, I worked as an associate producer at Indian News Live for about two years, after graduating with a degree in journalism from Karnataka University.

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