PSU, Indian Oil sold petrol at Rs 10 a litre loss, diesel at Rs 14; posts Rs 1,992-cr net loss in Q1

Indian Oil Corporation sold petrol at a loss of Rs 10 per litre and diesel at Rs 14 a litre during April-June, leading to the firm reporting its first quarterly net loss in over two years.

The nation’s largest oil refining and fuel retailing firm reported a net loss of Rs 1,992.53 crore in April-June compared to Rs 5,941.37 crore of net profit in the same period a year back and Rs 6,021.9 crore in the preceding January-March quarter.

“IOC (Indian Oil Corporation) reported an 88 per cent year-on-year decline in its standalone EBITDA to Rs 1,358.9 crore and a net loss of Rs 1,992.5 crore, despite record high gross refining margins (GRMs) of $ 31.8 per barrel for the quarter.

“Earnings decline was driven by a sharp fall in retail fuel margins for petrol and diesel with an estimated net loss of Rs 10 per litre for petrol and Rs 14 a litre for diesel for the quarter and inventory loss of Rs 1,500-1,600 crore due to excise duty cut in the quarter,” ICICI Securities said.

While fuel retailers are supposed to revise petrol and diesel prices daily in line with cost, IOC and other state-owned firms Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) kept prices on hold despite a rise in input cost.

The basket of crude oil India imports averaged $ 109 per barrel, but the retail pump rates were aligned to about $ 85-86 a barrel cost. This is the first quarterly loss in over two years. The company had reported a net loss in January-March 2020, but that was on account of inventory losses on processing costlier crude.

These losses negated record refining margins. IOC earned $ 31.81 on turning every barrel of crude oil into fuel at the refinery gate as opposed to a gross refining margin (GRM) of $ 6.58 per barrel in April-June 2021. The core margin, after offsetting inventory losses, was $ 25.34 per barrel. “However, the suppressed marketing margins of certain petroleum products have offset the benefit of an increase in GRM,” the company said in notes to its accounts.

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