No petrol, diesel price hike likely despite crude oil price surge as elections loom: Moody's
The Hindu
OMCs unlikely to increase petrol, diesel prices despite rising raw material costs due to upcoming elections. Despite crude oil prices surging, OMCs have kept prices on freeze for 18 months. High crude oil prices will weaken profitability of IOC, BPCL and HPCL. OMCs' earnings remain strong in 1Q FY2024, but expected to weaken in next 12 months. IOCL and BPCL better positioned to withstand increase in feedstock costs. Leverage of all three OMCs to remain well-positioned despite high capital spending. Govt's ₹30,000 cr capital support to boost OMCs' cash flows, partially cover capital spending.
Petrol and diesel prices are unlikely to be increased despite firming raw material costs because of upcoming general elections next year, Moody's Investors Service said.
Three state-owned fuel retailers — Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) — which control roughly 90% of the market, have kept petrol and diesel prices on freeze for a record 18 months in a row.
This is despite the raw material (crude oil) cost surging last year, leading to heavy losses in first half of 2022-23 fiscal year before easing oil prices propelled them to profitability.
Also Read | High oil prices to weaken profitability of 3 PSU oils firms, says Moody’s
International oil prices have firmed up since August, leading to margins of three retailers turning negative again.
"High crude oil prices will weaken the profitability of the three state-owned oil marketing companies in India — IOC, BPCL and HPCL," Moody's said in a report.
"The three companies will have limited flexibility to pass on higher raw material costs by increasing the retail selling prices of petrol and diesel in the current fiscal year because of upcoming elections in May 2024."
Run 3 Space | Play Space Running Game
Traffic Jam 3D | Online Racing Game
Duck Hunt | Play Old Classic Game
Firefighters discover body at Air India crash site in Ahmedabad; medical students among casualties, identification process ongoing.
Senior police officers transferred after communal clashes in Maheshtala; BJP criticizes transfers, police claim routine, new officers appointed.
Chief Minister Revanth Reddy urges Tollywood to join Telangana's $3 trillion economy mission, emphasizing support for film industry growth.
Manipur unites in grief after Flight AI-171 crash, mourning loss of crew members from Meitei and Thadou communities.
Mahanti Fish Market in Vijayawada faces relocation proposal by VMC due to traffic issues, sparking debate among workers and sellers.
Flotsam from Liberian cargo vessel reaches Kanniyakumari coast, prompting pollution concerns; clean-up efforts under way.
Residents celebrate successful revival of B. Channasandra lake in Bengaluru through collaborative efforts, overcoming challenges and threats.
61 persons from Rajasthan stranded in Georgia seek Indian government's help amid flight suspensions due to Israel-Iran conflict.
Rare event in Hima Sohra, Meghalaya, where a visitor was killed, sparking a murder mystery and tourist safety concerns.
Chamundi Hills development under PRASHAD scheme progresses with State and Centre funding, enhancing amenities for tourists and devotees.
Supreme Court cautions against misuse of preventive detention, emphasizing it should not replace criminal prosecution or bail orders.
Telangana dairy industry seeks uniform 5% GST rate on flavoured milk for clarity, consistency, and fair taxation.
Hundreds of people gathered at Kondapalli Fort on the outskirts of Vijayawada at the break of dawn on Saturday to take part in the Yogandhra programme organised by the NTR district administration.