Centre Limits Refinery Margins Amid Domestic Fuel Sale Losses

Recently, the Government of India announced a major move to cap refineries' margins to offset losses on domestic fuel sales. As per reports, margins of the refinery are capped at USD 15 per barrel, and any earnings above this shall be treated as a discount on fuel sold to the state-run oil marketing companies.

Impact Of Iran-Israel-US War On Global Oil Prices

The war in West Asia has led to two major impacts on the global economy. First, a spike in international oil prices created a domino effect and led to major losses to the oil companies in India. Second, it has swelled the margins of the refineries.

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Steps Taken To Control Retail Prices

In March, the government imposed a Special Additional Excise Duty (SAED) on exports of aviation turbine fuel and diesel to minimise windfall gains and maintain fuel supply in the economy.

Further, in the latter half of March, a discount of ₹22,342 per kilolitre (₹22.34 per litre) was applied to diesel, reducing the RTP from ₹85,349 per kl to ₹63,007 per kl. On 26 March, the oil marketing companies fixed rates for petroleum products at a discount of ₹60 per litre from their imported cost.

For the first fortnight of April, diesel is discounted by ₹60,239 per kl, bringing refinery transfer pricing down from ₹146,243 per kl to ₹86,004 per kl. For aviation turbine fuel, a discount of ₹50,564 per kl has reduced the RTP from ₹127,486 per kl to ₹76,923 per kl.

Similarly, kerosene has been discounted by ₹46,311 per kl, lowering the RTP from ₹123,845 per kl to ₹77,534 per kl.

Sources:

Economic Times

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