Fuel price hike: ‘Fuel price hike is inevitable’: State oil firms lose over Rs 1 lakh crore in 10 weeks amid Middle East crisis & more related news here

WTOs under financial pressure

Losses arise from the gap between the actual cost of fuel and the retail price, known as underrecovery.Sources said OMCs have continued uninterrupted supplies of petrol, diesel and LPG despite import disruptions caused by the Middle East conflict, which affected nearly 40 per cent of India’s crude oil imports, 90 per cent of LPG imports and 65 per cent of natural gas imports.“Financially sound OMCs are critical for India’s energy security, continuity of supply, infrastructure expansion and economic stability,” a source told PTI.The report says companies may now need larger working capital loans to continue operations if elevated crude oil prices persist for a longer period.“If elevated crude oil prices persist for a prolonged period, OMCs may require increased borrowing for working capital and a calibrated reprioritization of some capital expenditure schedules,” a source said.

Fuel price rise can become inevitable

Sources quoted by PTI said the decision to increase petrol and diesel prices has now become a political call for the government.“There is no doubt that an increase in fuel price has become inevitable, but the government must decide the timing and amount of the increase,” a source said.The Center has already reduced excise duty to absorb some of the burden. Excise duty on petrol was reduced to Rs 3 per liter from Rs 13, while excise duty on diesel was reduced to zero from Rs 10 per litre, resulting in a monthly revenue hit of around Rs 14,000 crore for the government.Despite growing pressure, strategic investments in refining expansion, biofuels, ethanol blending and energy security infrastructure are expected to continue with government support.