Oil PSUs absorbing Rs 550 crore loss per day to cushion consumers from soaring global prices
New Delhi, May 27
Under the direction of the government, the public sector oil companies are currently absorbing losses on the sale of petrol, diesel, and LPG to the tune of Rs 550 crore per day as they have refrained from passing on the full increase in global prices to protect domestic consumers, the Ministry of Petroleum and Natural Gas said on Wednesday.
This cushion, which has been put in place due to the disruption caused by the West Asia crisis, is intended for the retail consumers: the households, the two-wheeler commuters, and the farmers at the pump. It is not extended to industrial procurement, where pricing tracks international actuals as a matter of standing policy, the ministry said in a statement.
It warned that industrial consumers who divert their purchases from the industrial channel to the retail pump capture this cushion at the cost of the ordinary citizen. They also concentrate demand at the pump in a way that produces local shortages where none would otherwise exist, it highlighted.
It has been observed that private oil marketing companies are experiencing a decline of approximately 38 per cent in diesel offtake during the current month, across both retail outlets and bulk customers, due to higher rates fixed by them, it said. This volume is shifting entirely to PSU oil marketing retail outlets. Coupled with this, PSU bulk customer volumes have also recorded a decline of approximately 29 per cent, which is also migrating to retail outlets.
The government, taking a serious view of this, has asked the industry associations to make their members aware of both the principle and the consequences of violations.
It has requested states/UTs to form special squads and take strict action against malpractice of bulk consumers and hoarders taking supplies meant for retail consumers, black marketing, unauthorised stocking, and diversion of petroleum products under relevant provisions of the Essential Commodities Act and Control orders issued thereunder.
"The country has more than adequate supplies of petrol and diesel to meet every domestic need, retail and industrial alike. India is the world's fourth largest refiner, with an installed capacity of 258.1 million tonnes per annum across 22 operational refineries. Domestic consumption was 243.2 million tonnes in FY 2025-26; petroleum product exports were 61.5 million tonnes in the same year, making India one of the largest exporters of refined products globally. There is no supply issue of any kind," the Petroleum Ministry statement said.
Noting that the government remains fully seized of the international situation, the statement said that India's refining strength, the disciplined operation of the public sector OMCs and the active coordination across the Centre, States and industry constitute the working architecture of energy security during this period. Citizens are requested to rely on official communication and to disregard rumours that mistake an arbitrage problem for a supply problem, it added.
— IANS
Reader Comments
As someone living in a major Indian city, I appreciate the cushion. Petrol prices are already high enough for daily commuters. But the government should be more transparent about how long this will last. Also, why is industrial pricing not cushioned? That seems like it could hurt manufacturing. Overall, a necessary step for now.
So the government is subsidising petrol and diesel for retail but not for industry. Fine in principle, but I've heard of cases where small businesses are forced to buy from retail pumps because industrial supply is too expensive. Are they being penalised unfairly? Also, Rs 550 crore daily—that's almost 2 lakh crore annually. Can't help but think this adds to fiscal pressure. 😕
Interesting that India is a net exporter of petroleum products. Never really thought about that. But if we have 'more than adequate supplies,' why are there shortages at some pumps? The article says it's due to diversion, but I've seen lines at a few outlets in my area. Hope the special squads actually work. 🤞
Classic 'declare a crisis, then subsidise' approach. While I'm relieved for the common man who uses two-wheelers and tractors, I worry about the moral hazard. Why would OMCs ever become efficient if the government always absorbs losses? Also, the industrial sector bears the brunt—this could hurt our 'Make in India' ambitions in the long term. A temporary measure, yes, but let's not pretend it's free.
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