Petrol Price: Will petrol and diesel prices rise after gas? Refinery prices are being frozen; will the public benefit?

News Topical, Digital Desk : Public sector petroleum marketing companies (OMCs) are considering paying refineries lower prices than imported rates for petrol and diesel to reduce losses incurred due to non-increase in retail fuel prices. This move could adversely impact single refinery companies like Mangalore Refinery, Chennai Petroleum and HML. Before the West Asia crisis, international crude oil prices were around $70 per barrel, which have now risen to over $100. However, retail prices of petrol and diesel in India have remained stable, forcing petroleum marketing companies to bear the burden of this increase.

What is OMC's plan?

These OMCs are now considering the option of either freezing or waiving the Refinery Transportation Charge (RTP). RTP is the internal price at which refineries sell fuel to their marketing segments. This move aims to ensure refineries pay less than the import-parity cost of petrol and diesel.
If global oil prices remain high, this proposed move will prevent refineries from passing on the entire burden of increased crude oil costs through RTP and they will have to bear a portion of this impact themselves.

This is how the loss will be compensated

Integrated companies like Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL) can offset this loss between their refining and marketing operations.
On the other hand, standalone refineries like Mangalore Refinery and Petrochemicals Limited (MRPL), Chennai Petroleum Corporation Limited (CPCL), and HPCL-Mittal Energy Limited (HMEL) have little exposure to the retail market and sell most of their production to these three OMCs. Therefore, their margins will be most impacted.

Nayara Energy and Reliance will also be affected

Sources also said that if the RTP moratorium or exemption is extended to private refineries, refinery companies like Nayara Energy and Reliance Industries Ltd. Both these private companies sell a significant portion of their production to OMCs.

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