While petrol and diesel prices are deregulated, in practice, the government-owned OMCs—with 90% market share in fuel retail—have kept prices stable.There is no proposal at present to hike retail prices of petrol and diesel in the country due to the spike in international prices amid the West Asia crisis, the Ministry of Petroleum and Natural Gas (MoPNG) said Thursday as it dismissed reports of the likelihood of a steep hike in fuel prices after the ongoing assembly elections. Retail prices of petrol and diesel have not been hiked by public sector oil marketing companies (OMCs) even though they are incurring heavy losses on fuel sales due to the surge in international prices of crude oil and fuels.“There are some news reports suggesting a price hike of petrol and diesel. It is hereby clarified that there is no such proposal under consideration by the Government. Such news items are designed to create fear and panic amongst the citizens and are mischievous and misleading,” the MoPNG said in a post on social media platform X.“In fact, India is the only country where petrol and diesel prices haven’t increased in the last 4 years. Govt of India and Oil PSUs have taken relentless steps in order to insulate the Indian citizens from steep increases in international prices,” it added.While petrol and diesel prices are deregulated, in practice, the government-owned OMCs—with 90% market share in fuel retail—have kept prices stable. They incur heavy losses when international oil prices surge, and earn hefty profits when the prices slump. Petrol and diesel prices have been more or less frozen since April 2022.A few reports, quoting a recent note by brokerage Kotak Institutional Equities, had talked about the potential hike of Rs 25-28 per litre in petrol and diesel prices once the assembly elections conclude. The final phase of voting is scheduled for April 29. The brokerage reportedly said that the case for a petrol and diesel price hike is strong, but the timing is driven by political considerations.With the West Asia war, which started on February 28, effectively closing off the critical maritime chokepoint of the Strait of Hormuz, crude oil and fuel prices have surged globally. A fifth of global oil and liquefied natural gas flows usually transited the Strait. India depends heavily on oil and gas imports to meet its energy needs, and fuel prices in the country are linked to global oil and fuel price benchmarks. While India has been in a comfortable position with regard to crude oil, petrol, and diesel availability, it still has to bear the brunt of high prices.International crude oil benchmark Brent had touched $119 per barrel in March, up from about $73 per barrel on February 27, just a day before the US and Israel attacked Iran. While there was some correction in prices, they continue to be significantly higher than the pre-war levels. Crack spreads—or margins between oil and petroleum products—have also surged globally for fuels, including petrol and diesel.Story continues below this adThe three public sector OMCs—Indian Oil, Bharat Petroleum, and Hindustan Petroleum—have been incurring heavy losses on fuel sales. On April 1, the MoPNG had said that the OMCs were incurring under-recoveries of over Rs 24 per litre on petrol and almost Rs 105 per litre on diesel. The under-recovery figures are dynamic and would have changed over the past few days, but continue to remain substantial. The OMCs did hike prices of the premium variants of petrol and diesel, but these variants account for just 2-5% of total petrol and diesel sales in volume terms.To provide some cushion to the OMCs as they grapple with the financial burden, the government last month slashed excise duty on petrol and diesel by Rs 10 per litre. Nonetheless, the fuel retailers continue to bleed heavily by selling these fuels at a loss.A continued freeze in pump prices is expected to blunt the inflationary impact of the oil price spurt. “The OMCs have done well financially over the past few years and they are in a comfortable position to take some temporary pain to protect the Indian consumer from high energy prices…Is the price of petrol or diesel at the retail outlet going to rise in the foreseeable future? It is unlikely to happen,” a senior government official had said in March.Sukalp Sharma is a Deputy Associate Editor with The Indian Express and writes on a host of subjects and sectors, notably energy and aviation. He has over 16 years of experience in journalism with a body of work spanning areas like politics, development, equity markets, corporates, trade, and economic policy. He considers himself an above-average photographer, which goes well with his love for travel. ... Read More © The Indian Express Pvt Ltd