IOC, BPCL, HPCL revenue slows down amid petrol, diesel price hike

New Delhi: India's top fuel retailers IOC, BPCL, and HPCL together lost around USD 2.25 billion (Rs 19,000 crore) in revenue for keeping petrol and diesel prices on hold during elections in five States, Moody's Investors Services said on Thursday.

State fuel retailers did not revise petrol and diesel rates for a record 137 days, despite prices of crude oil (raw material for producing fuel) rising to USD 120 per barrel compared to around USD 82 in early November when the hiatus began.

"Based on current market prices, the oil marketing companies are currently incurring a revenue loss of around USD 25 (over Rs 1,900) per barrel and USD 24 per barrel on sale of petrol and diesel, respectively," Moody's said in a report.

If crude oil prices continue to average around USD 111 entities barrel, the three rated entities - IOC, BPCL, and HPCL-will incur a combined daily loss of around USD 65-70 million on the sale of petrol and diesel unless fuel prices are increased to cover the rising crude oil prices, it said.

"Based on our estimates of on Thursday average sales volume between November and first three weeks of March, the state-owned refining and marketing companies together have lost around USD 2.25 billion in revenue on petrol and diesel sales," Moody's said.

This equates to around 20 percent of the combined FY2021 EBITDA for the three entities.

State-owned Indian Oil Corporation (IOC), Bharat Petroleum Corporation, and Hindus- tan Petroleum Corporation USD 110-120. (HPCL) had on March 22 and 23, raised petrol and diesel prices by 80 paise per litre each but paused the increase on Thursday.

Oil companies "will need to raise diesel prices by Rs 13.1- 24.9 per litre and Rs 10.6-22.3 a litre on gasoline (petrol) at an underlying crude price of USD 100-120 per barrel," according to Kotak Institutional Equities.

CRISIL Research said an Rs. 9-12 per litre increase in retail will be required for a full pass-through of an average USD 100 per barrel crude oil and Rs 15-20 a litre if the average crude oil price rises to USD 110-120.

Moody's estimated that IOC's revenue loss was around USD 1-1.1 billion, while that of BPCL and HPCL was about USD 550 650 million each for the period between November and March.

Source: PTI