India OMCs Discount Refinery Transfer Prices

Indian state-run oil marketing companies (OMCs) have decided to pay discounted prices to refineries for petrol, diesel, aviation turbine fuel (ATF), and kerosene. This move, effective from March 16, aims to limit mounting losses for OMCs due to a self-imposed freeze on retail fuel prices in India, despite international crude oil prices rising from USD 70 to over USD 100 per barrel. The discounted rates, up to Rs 60 per litre, will prevent refiners from fully passing on higher crude costs. Integrated OMCs like Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation can partially offset the impact, but standalone refiners such as Mangalore Refinery and Petrochemicals, Chennai Petroleum Corporation, and Hindustan Petroleum Corporation===HPCL-Mittal Energy, which have negligible retail presence, will be most affected. Private refiners like Nayara Energy and Reliance Industries could also be impacted if the discount is extended to them. The India===Ministry of Petroleum and Natural Gas noted significant under-recoveries for OMCs on petrol and diesel.