Indian oil marketing companies (OMCs) are under significant financial strain due to under-recoveries on petrol, diesel, and domestic LPG sales, according to credit rating agency ICRA. The agency estimates losses of about ₹8 per litre on petrol, ₹9 per litre on diesel, and nearly ₹300 per domestic LPG cylinder. This indicates that revenues from these products fall short of the costs to supply them.
The impact is substantial because petrol and diesel see high nationwide sales volumes, and LPG is a critical household cooking fuel. ICRA analysts estimate that these under-recoveries lead to a combined daily loss of around ₹530 crore for OMCs. This figure represents the cumulative financial burden caused by the gap between fuel costs and current selling prices.
This situation adds pressure on the earnings and cash flows of major OMCs, especially state-run firms central to India's fuel supply. Prolonged under-recoveries may reduce operating margins and hinder the companies' capacity to fund investments and other needs. The LPG under-recovery of nearly ₹300 per cylinder is particularly impactful due to its widespread domestic use and relevance to consumer affordability.
ICRA's assessment underscores the considerable financial burden borne by Indian OMCs. With under-recoveries of ₹8 per litre on petrol, ₹9 on diesel, and nearly ₹300 per LPG cylinder, the daily combined loss is estimated at ₹530 crore. These figures highlight the persistent challenge of balancing fuel costs, retail pricing, and financial stability for oil marketing companies.
