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Informist, Monday, May 11, 2026

 

--Govt source: PSU oil cos' Q1 losses could be upto INR 1.2 tln

--Govt source: PM Modi's comments don't warrant risk of price hike

--Govt source: Committed to not hike petrol, diesel prices

--Govt source: Going all out to protect consumers from petrol, diesel price hike

--Govt source: Focussed on converting LPG users to PNG

 

NEW DELHI - State-owned oil companies are so far bearing the brunt of the ongoing energy crisis, while ensuring uninterrupted energy imports and supply, and that may lead to their losses for Apr-Jun ballooning to INR 1 trillion - INR 1.20 trillion, a senior oil ministry official said. "Q1 losses could wipe out the entire profit of around INR 750 billion made in FY26," the official said Monday. 

 

Under-recoveries during the quarter, meanwhile, are expected to surge to INR 2 trillion, according to the official. However, the government is entirely focussed on ensuring the price pressure is not passed on to consumers, the official said, adding that while india has diversified its energy sources, it is paying a premium on even the quoted or previously agreed to price.

 

India is facing one of the worst energy crises in decades due to the war in West Asia. It has been exposed to energy supply and price shocks, given its dependence on countries in the Persian Gulf region for crude oil, liquefied petroleum gas, and liquefied natural gas supplies. Crude oil prices have soared around 60% following the closure of the Strait of Hormuz since early March. Nearly half of India's crude and natural gas imports pass through this crucial waterway. The supply shock has led to a surge in fuel prices in several developing and advanced economies, but retail prices in India have remained unchanged.

 

Amid the rising clamour about an imminent rise in petrol and diesel prices, Prime Minister Narendra Modi's comments on Sunday only added fuel to the fire. Modi Sunday urged people to cut down on the use of petrol and diesel as India finds itself in an increasingly tough spot amid the ongoing energy crises. Speaking at a political rally, he said that petrol and diesel prices have risen sharply in the global market and cutting down on their use will help India conserve its forex reserves, which are being used to pay for imports. 

 

According to the senior oil ministry official, Modi's comments should not be assumed to be a precursor to a price hike, rather an attempt to control the demand side of petrol and diesel. "There is also no thought process to rationalise supplies," the official said. 

 

The government has already taken a slew of measures to mitigate the impact of the war, including cutting excise duty on petrol to INR 3 per litre from INR 13 per litre and that on diesel to zero from INR 10 per litre to help oil marketing companies absorb the rise in crude oil prices. The government's total revenue losses could touch INR 1.65 trillion, the official said. 

 

Beyond petrol and diesel, India is severely hit from the energy crises as it depends on imports to meet around 60% of its LPG needs and around 90% of those imports transit through the crucial chokepoint of the Strait of Hormuz. Liquefied petroleum gas is India's primary cooking gas. According to the official, the government is currently focussed on switching LPG consumers into piped natural gas consumers. So far, around 50,000-60,000 LPG consumers have switched to PNG, the official said. 

 

Cooking fuel prices have also remain broadly unchanged, and oil marketing companies are currently losing INR 700 per cylinder. Their total losses during the Apr-Jun quarter could be in the range of INR 500 billion to INR 600 billion, the official said. 

 

Asked whether the government will compensate oil companies for the severe losses, the official said that the government is the "mothership" and it will be the government's discretion to protect PSU oil companies. The finance ministry may have a better view on it, the official said, adding that no proposal is under consideration currently as it is not yet the opportune time to seek relief for the companies.  End

 

Reported by Priyasmita Dutta

Edited by Avishek Dutta

 

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