The recent fuel price hike has helped cut down on the losses of the oil companies - but only to an extent. The companies, which were incurring losses to the tune of Rs 1,600 crore a day, are losing around Rs 750 crore a day after the approximate Rs 3 per litre hike.
"Currently, the daily loss incurred by state-run oil companies stands at approximately Rs 750 crore. This figure includes the import costs for petrol, diesel, and LPG," Sujata Sharma, Joint Secretary at the Ministry of Petroleum, said today.
"Their under-recoveries and financial losses are significant... No bailout package for oil companies has been considered at this juncture," she added.
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The price of crude oil is spiralling upward due to the ongoing crisis in the Middle East.
The latest report from the Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum, shows the price of crude oil (Indian Basket) stood at $69.01 per barrel in February - prior to the outbreak of hostilities in the Middle East.
But driven by the 80-day conflict and clashes, the price surged to $110.73 per barrel by May 15. This was an increase of $41.72 per barrel between February (based on average prices) and May 15 - marking a cumulative increase of 60.45 per cent.
India imports over 85 per cent of its crude oil requirements and approximately 60 per cent of its LPG from the international market. Of these imports, roughly 40 per cent of the crude oil and 90 per cent of the LPG historically reached India via the Strait of Hormuz.
But due to the conflict between the United States and Iran, the movement of cargo vessels through the Strait of Hormuz has been severely disrupted, and India's total expenditure on crude oil imports has surged by over 60 per cent.
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To alleviate the growing burden on state-run oil companies, the government decided on March 27 to reduce the excise duty on petrol and diesel by Rs 10 per litre.
States -- which generate revenue amounting to hundreds of thousands of crores of rupees annually from the VAT and Sales Tax levied on petrol and diesel -- however, are yet to reduce VAT or Sales Tax.
