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Informist, Thursday, Apr. 2, 2026

MUMBAI – State-run oil marketing companies are set to face losses from the sale of domestic aviation turbine fuel due to just a marginal hike in prices by the government, sharply lower than the breakeven prices, Nomura said. Nomura expects state-run oil marketing companies to lose INR 64 per litre on domestic sales of aviation turbine fuel, after the Centre, on Wednesday, announced a marginal price hike for ATF. Nomura said these losses imply a marketing loss of around $109 per barrel on domestic aviation turbine fuel sales, even though these form only 2-6% of the total marketing volume of these companies.

The brokerage expects loss on sales of aviation turbine fuel at INR 236 billion for Indian Oil Corp. Ltd., INR 95 billion for Bharat Petroleum Corp. Ltd., and INR 53 billion for Hindustan Petroleum Corp. Ltd., at the current fuel prices. Around 65% of the total aviation turbine fuel sales in India are to domestic airlines, it said. "Like petrol and diesel retailing, OMCs control a large share of the ATF (aviation turbine fuel) market at ~90%+, while private players such as Reliance (Industries Ltd.), Nayara (unlisted), Shell (unlisted) have the balance share," it said.

Oil marketing companies have also raised the prices of commercial liquefied petroleum gas. While these companies may approach break-even on commercial LPG sales after accounting for logistics costs, the losses on domestic LPG has risen to INR 380 per cylinder, Nomura said. "This puts further pressure on the government's fiscal position as LPG under-recovery is largely reimbursed to OMCs (oil marketing companies) with a lag, though there remains uncertainty in terms of the timing and the amount of losses that the government will absorb" the brokerage said.

CITY GAS DISTRIBUTORS

While domestic gas price revisions were in line with expectations, Nomura expects Gujarat Gas Ltd. to be the worst hit among city gas distributors due to reliance on spot liquefied natural gas. Despite the increase in propane prices, Gujarat Gas may not benefit as the hike is much lower to the rise in spot liquefied natural gas prices. "This results in propane remaining cheaper than natural gas which is relevant to GGL's (Gujarat Gas) industrial customer base especially in Gujarat's Morbi region, who can easily switch between these two fuel sources depending on prices."

The government's decision to hike domestic gas prices were in line with expectations, Nomura said. "We believe the lower HPHT (high pressure, high temperature) price locked in for the next six months may turn out to be a key positive for CGD (city gas distributors) margins once the situation normalises," Nomura said.

Nomura said Mahanagar Gas Ltd. is best placed in terms of sourcing of gas due to its higher reliance on Henry-Hub linked contracts, which are "priced attractively" due to soft gas prices, and availability is also not a challenge, the brokerage said. Indraprastha Gas Ltd. may face challenges in pricing and availability as it has a higher share of Brent-linked contracts. Nomura said Gujarat Gas may be "worst hit" due to its higher reliance on short-term and spot LNG where prices have doubled since the war in West Asia started.

INDIA's CRUDE BASKET

Meanwhile, India has overhauled its crude oil basket to reflect the changing import mix. The share of Brent-linked crude has been raised significantly to 61.02% from the 21.29% earlier while the share of Oman-Dubai crude has been lowered to 38.98% from 78.71% earlier. "We think the new basket better reflects India's current sourcing profile, as the share of Middle East (West Asia) crude has significantly come down since the start of the Russia Ukraine war, with India sourcing a large proportion of its crude from Russia which is priced on a Brent basis," it said. India has also raised its oil sourcing from the US to around 10% currently from below 5% in 2024.  End

US$1 = INR 92.85

Reported by Ashutosh Pati

Edited by Akul Nishant Akhoury

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