Fuel Subsidies Returns, Oil Companies to Receive Rs 30,000 Crore to Maintain Prices

In order to compensate state-owned fuel retailers for the enormous losses they incurred as a result of maintaining petrol and diesel prices despite cost increases in an effort to help the government control inflation, the Union Budget for 2023–24 would distribute Rs 30,000 crore to them.

The funds were allotted by Finance Minister Nirmala Sitharaman under the heading "capital support to oil marketing corporations". It made no attempt to explain why the high-profile, cash-rich oil PSUs would want financing assistance.

Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) haven't changed petrol and diesel prices since April 6, 2022, despite input crude oil prices rising from USD 102.97 per barrel that month to USD 116.01 per barrel in June and falling to USD 80.92 per barrel this month.

Despite input crude oil prices rising from USD 102.97 per barrel that month to USD 116.01 per barrel in June and falling to USD 80.92 per barrel this month, Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) haven't changed the prices of gasoline and diesel since April 6, 2022.

The three enterprises reported negative net earnings as a result of maintaining prices while input costs were greater than retail selling prices. Despite accounting for the Rs 22,000 crore in LPG subsidies that had been announced but not paid for the previous two years, they reported a total net loss of Rs 21,201.18 crore from April to September.

For the week ending June 24, 2022, this freeze had resulted in record-breaking losses of Rs 17.4 per litre on gasoline and Rs 27.7 per litre on diesel. Nevertheless, a subsequent downturn caused losses on gasoline to disappear and diesel prices to drop to Rs 10–11 per litre. In order to enable the oil firms to recover the significant under-recovery of Rs 50,000 crore they ran for holding prices, retail rates weren't modified when oil prices were high.

For the purpose of accumulating crude oil reserves, Rs 5,000 crore has been allocated to the Indian Strategic Petroleum Reserves (ISPRL). According to him, the refiners would benefit from the increase in the basic customs duty on naphtha since it would result in higher sales realizations from domestic sales.