Margins on petrol rise to Rs 13 per litre, diesel Rs 10 on lower crude: Report

NEW DELHI: The marketing margins on petrol and diesel have risen to Rs 13.60 per litre on petrol and Rs 10.70 on diesel on the back of muted oil prices and steady returns from refining operations during the ongoing quarter (October-December), brokerage Motilal Oswal Financial Services Ltd said in its latest market update on Thursday.

According to the report, the current margins reflect a 34% jump over the previous quarter (July-September), a fact that strengthens the argument for a reduction in the backdrop of the high cost of living being one of the dominant themes in the current political discourse.


Petrol and diesel prices were last reduced ahead of the Lok Sabha elections on March 14 by Rs 2 per litre when the mix of crude bought by Indian refiners stood at $84.49 per barrel, while the average has slipped to $72.51.

In a further upside for the oil marketing companies, the report projects lower inventory losses in the absence of major shifts in crude or product prices in the current quarter. This is unlike in the second quarter when their profitability was impacted by losses on petrol and diesel stocks due to a sharp correction in 'cracks' -- broadly, benchmark rates for refined products -- compared to the first quarter, in addition to inventory losses on sliding crude.

The report projects an 18% increase in under-recovery on LPG (liquefied petroleum gas) supplied to households as cooking fuel, which the government makes up with financial assistance. But even if government help is not forthcoming, the marketing margins can offset the under-recovery on selling market-priced LPG at government-controlled rates that are lower.

However, the report clearly warns that under-recovery on cooking fuel remains a risk for the companies without government support, with LPG prices averaging $645 per tonne and touching a peak of $940 tonne over the last three years.


IndianOil, Hindustan Petroleum and Bharat Petroleum, the three state-run refiner-retailers that control 90% of the fuel market, had together ran up a combined under-recovery of Rs 7,900 crore in the second quarter.

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