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  • Unchanged Retail Fuel Prices Amid Oil Volatility To Support Returns For Industry: Report | Economy News

    New Delhi: Amid the ongoing geo-political tensions, unchanged retail fuel prices amid the volatile oil prices will support overall returns for the industry, according to a report on Thursday. Operating profit will be higher than the $9-11 per barrel on average over the 10 years through fiscal 2025. This will partly support the continued substantial capital expenditure (capex) of Oil marketing companies (OMCs), said a CRISIL Ratings report.

    OMCs are projected to see operating profit drop to $12-14 per barrel in fiscal 2025 from $20 per barrel last fiscal. The moderation is expected as diesel spreads soften, discounts on Russian crude oil wane and the impact of inventory loss kicks in with crude oil price averaging $75 per barrel currently, down from $82 per barrel in the first half of the fiscal.

    According to Aditya Jhaver, Director, CRISIL Ratings, gross refining margin (GRMs) are seeing a steep correction this fiscal and are likely to average $3-5 per barrel, with diesel spreads evening out as refineries globally have ramped up production while consumption has slowed. .

    “That said, overall returns will be bolstered by marketing margins (net of operating expenses) that are likely to continue at Rs 4.5 per liter (or $9 per barrel), factoring no reduction in retail fuel prices,” he noted. OMCs earn from two businesses — refining business and marketing business.

    While oil price declined 11 per cent on-year to average $83 per barrel in fiscal 2024, the fluctuation in inventory value had a marginal impact on overall GRM (reported at $12 per barrel). Core margins were healthy because of high diesel spreads with continued geopolitical uncertainties that disrupted the global energy supply chain keeping international prices high.

    Further, the largely unchanged retail fuel rates resulted in healthy marketing margins (net of operating expenses) of Rs 4 per liter or $8 per barrel, cumulating to an overall high profit of $20 per barrel for the year, the report mentioned.

    The resulting cumulative cash accrual, estimated at Rs 52,000-54,000 crore, will partially support the Rs 90,000 crore capex planned by OMCs. “While profits could moderate on-year, the industry is expected to continue with capex, which will partly be debt funded,” said Joanne Gonsalves, Associate Director, CRISIL Ratings.

  • ATF value reduce by 2.2 per cent

    Jet gas (ATF) costs on Saturday have been decreased by 2.2 per cent, reflecting a fall in worldwide oil costs. Aviation turbine gas (ATF) costs have been reduce by Rs 3,084.94 per kilolitre, or 2.2 per cent, to Rs 138,147.93 per kl, a value notification of state-run gas retailers confirmed.

    This is just the second discount in charges this yr. Prices had peaked to Rs 141,232.87 per kl (Rs 141.23 per litre) final month.

    ATF costs are revised on the first and sixteenth of each month primarily based on charges of benchmark worldwide oil charges within the earlier fortnight.

    There was no change in charges on July 1.

    Prior to that, costs have been hiked by the steepest ever 16 per cent to catapult charges to an all-time.

    International oil costs have softened since on fears of recession in main economies. Oil costs are at pre-Ukraine struggle ranges.

    On June 16, the value of ATF — the gas that helps aeroplanes fly — was elevated by Rs 19,757.13 per kl. That adopted a marginal 1.3 per cent (Rs 1,563.97 per kl) reduce in price on June 1.

    But for the one-off lower on June 1, ATF costs have been on the rise all through 2022.

    In all, charges have been elevated 11 occasions for the reason that begin of the yr. This has led to charges virtually doubling in six months.

    Prior to the reduce on Saturday, costs had gone up by 91 per cent (Rs 67,210.46 per kl) since January 1. With jet gas making up virtually 40 per cent of the working price of an airline, the rise in costs had resulted in an increase in the price of flying. Now there was a marginal reduction.

    Meanwhile, petrol and diesel costs remained unchanged at Rs 96.72 per litre and Rs 89.62 a litre, respectively.

    An excise obligation reduce by the federal government had helped scale back the value of petrol by Rs 8.69 a litre and diesel by Rs 7.05 per litre on May 22. But for that, the bottom value has remained unchanged since April 6.

    Before that, costs had risen by a document Rs 10 per litre every.

    The retail costs of petrol, diesel and home cooking gasoline are approach beneath the fee. Petrol and diesel charges are revised each day, primarily based on equal charges within the worldwide market.

  • Another hike in ATF value, airfares set to rise

    IN THE tenth hike because the starting of the 12 months, state-owned oil advertising and marketing firms revised the value of aviation turbine gas (ATF) by 16.3%, taking the price of jet gas in Delhi to a report excessive of Rs 1,41,232.87 per kilolitre. The rising jet gas costs, mixed with depreciating rupee, is about to extend the price of operations for airways, resulting in a rise in airfares by as much as 15%.

    Aviation trade specialists have identified that gas price is already at unsustainable ranges and airways haven’t any possibility however to move it on within the type of fare hikes. SpiceJet chairman Ajay Singh, in an announcement, stated they must move on the rise in ATF costs to fliers, and that may result in a rise in fares by as much as 15%.

    Jet gas costs are revised on the first and sixteenth of each month, based mostly on the common worldwide value of benchmark gas within the previous fortnight.

    The price of ATF includes as much as 50% of the price of operations for airways in India. Airlines are already battling the autumn within the worth of the home foreign money (rupee is 5.7% weaker in opposition to the US$ since June 2021) since prices like lease leases, funds to international airport operators and expat pilots are all greenback denominated.

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    “Aviation turbine fuel prices have increased by more than 120% since June 2021. This massive increase is not sustainable and governments, central and state, need to take urgent action to reduce taxes on ATF that are amongst the highest in the world. We have, in the last few months, tried to absorb as much burden of this fuel price rise as we could,” SpiceJet’s Singh stated.

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    Jet gas costs have been elevated by state-owned oil advertising and marketing firms each fortnight because the starting of 2022, and in 10 hikes beginning January 1, ATF costs have been elevated by Rs 67,210.46 per kilolitre. “The sharp increase in jet fuel prices and the depreciation of the rupee have left domestic airlines with little choice but to immediately raise fares and we believe that a minimum 10-15% increase in fares is required to ensure that cost of operations is better sustained,” Singh added.

    Even because the summer time journey season was anticipated to generate excessive demand, sustained gas value enhance and excessive fares have tempered this demand. “The forward bookings are not looking very good. We expected that by this time, we’d be well past the pre-Covid numbers, but the general sentiment has not been in favour of air travel mainly because of high fares, especially in the last month or so,” stated a senior government of a low-cost airline.

    Travel trade insiders say fares are already about 50% increased than final 12 months and an additional enhance will affect that demand. Any enhance in fares impacts passenger demand since individuals go for cheaper modes of journey like trains and roadways.

    Notably, home airfares are nonetheless ruled by government-mandated value ceilings and flooring.

    The airline trade had sought respite by way of a minimize in excise responsibility on ATF or by bringing jet gas underneath GST, that may deliver down charges in addition to permit airways to say enter credit score tax on GST paid. While bringing it underneath GST appears unlikely for now, the aviation ministry had requested the finance ministry to scale back excise responsibility on jet gas by 2 share factors to 9 per cent. The finance ministry, nevertheless, didn’t minimize any taxes on ATF.

  • Petrol pumps in 24 states to not purchase gas on Tuesday, demand larger fee

    By ANI

    NEW DELHI: A petroleum pump sellers’ affiliation has introduced that no buy of petrol and diesel will probably be completed from oil advertising corporations (OMC) on Tuesday as a mark of protest in opposition to no improve within the fee of petrol pumps by the OMCs.

    The Association stated petrol sellers in 24 states will be a part of the protest. However, the availability shouldn’t be prone to be disrupted as there may be sufficient inventory within the gas bunks.

    “In 24 states in the country, we will not purchase petrol and diesel from oil marketing companies (OMC) on Tuesday, 31 May in protest of no revision in their commissions despite the rise in petrol and diesel prices,” stated President, Delhi Petrol Dealers Association.

    According to the Association, the vendor margins are to be revised each six months however the OMCs haven’t completed the identical since 2017 regardless of a steep improve in gas costs and operational prices.

    The Association stated the discount in costs of petrol and diesel by the central authorities by excise responsibility reduce has put the burden on petrol pumps resulting in additional losses.

    Earlier this month, in a big step aimed toward offering aid to folks from excessive gas costs, the Centre introduced a discount in excise responsibility on petrol by Rs 8 per litre and on diesel by Rs 6 per litre.

    The states the place the petrol sellers will be a part of the protest embrace Delhi, Punjab, Haryana, Gujarat, Rajasthan, Maharashtra, Tamil Nadu, Karnataka, Himachal Pradesh, Bihar, Telangana, Andhra Pradesh, Kerala, Assam, Meghalaya, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Sikkim and West Bengal.

  • OMCs set to purchase discounted oil from Russia; no sanctions, says US

    State-owned oil advertising and marketing corporations (OMCs) are set to obtain crude oil from Russia at a reduction, based on sources at OMCs as costs stay elevated because of the Russia-Ukraine battle.

    The White House has additionally stated a transfer by India to obtain crude from Russia wouldn’t be a violation of its sanctions on Moscow, however added international locations ought to take into consideration the place they stand relating to Russia’s invasion of Ukraine.

    Despite a fall in oil costs over the previous week, worth of Brent crude has risen round 29 per cent for the reason that starting of the yr, amid issues about secure provide of oil and gasoline.

    “The state-owned OMCs will be procuring from Russia for varying levels of their requirements, based on whatever they can process at their refineries,” stated a supply, including the federal government had given the nod to procurement of Russian crude.

    The official stated the low cost on provide made Russian crude a comparatively enticing proposition. While India imports about 80 per cent of its crude oil necessities, solely 2-3 per cent of crude imports are at present sourced from Russia. The transfer would come at a time when OMCs have been absorbing losses on advertising and marketing petrol and diesel, based on consultants, as they’ve held charges fixed for over 4 months regardless of a pointy improve in costs.

    OMCs, which ordinarily revise gas costs each day primarily based on benchmark worldwide costs, halted worth revisions on November 4 when the Centre’s excise obligation hikes had been put in place and have maintained costs on the similar ranges by way of elections in Uttar Pradesh, Punjab, Uttarakhand, Goa and Manipur.

    “I don’t believe this would be violating that (sanctions),” stated White home press secretary Jen Psaki,  when requested about stories that India was seeking to procure discounted crude oil from Russia.

    Psaki did, nonetheless, ask that international locations take into consideration the place they wish to stand within the present battle, including that “ support for the Russian leadership is support for an invasion that obviously is having a devastating impact.”

    Russian cargoes of crude are at present dealing with points discovering consumers as merchants are involved about doubtlessly violating sanctions. Major gamers are involved about reputational harm from procuring Russian crude. Last week, world oil main Shell apologised for procuring Russian crude amid the continued Ukraine battle and dedicated to halting all spot purchases of Russian crude and  shut its service stations, aviation fuels and lubricants operations in Russia.

    The US and Europe have imposed a slew of sanctions on Russia, together with eradicating a number of Russian banks from the SWIFT messaging system, which performs a key position in worldwide monetary transactions. The US has banned all power imports from Russia in addition to new power investments in Russia.

  • Global-local divide in gasoline: OMCs making up for ‘under recoveries’

    While petrol and diesel costs are nonetheless at or close to record-high ranges within the nation, worldwide crude oil has fallen 13.9 per cent for the reason that starting of August.
    Industry sources instructed The Indian Express that Oil Marketing Companies (OMCs) could be withholding a part of the profit from the autumn in worldwide costs to compensate for beneath recoveries throughout earlier durations. Separately, Finance Minister Nirmala Sitharaman has dominated out lowering Central taxes on petrol and diesel, citing the monetary burden of getting to pay curiosity funds on oil bonds issued to OMCs for earlier beneath recoveries by the Congress-led UPA authorities.
    An sudden build-up of gasoline inventories within the US and issues in regards to the unfold of the Delta variant pushed Brent crude to $65.63 per barrel on Friday (as of 12:30 pm EDT) — its lowest stage since May.
    “Under recoveries during prior periods, such as state elections when price increases were held back, are likely the reason that OMCs are being slow in passing on the benefit of lower international prices to consumers”, mentioned an official at a public sector OMC. Usually, the total influence of modifications to crude oil costs is commonly seen with a lag as home charges are benchmarked to a 15-day rolling common of world costs of petrol and diesel.
    Industry sources mentioned the total influence of decrease international costs can be felt sooner in diesel than petrol as beneath recoveries for the previous had been considerably decrease than the latter, and had been more likely to be recouped quickly if the present development of low costs continues.
    Experts famous that with no excise responsibility reduce anticipated and OMCs withholding a part of the advantage of decrease worldwide costs, customers would solely profit from decrease gasoline costs if crude oil costs continued to stay at decrease ranges for a sustained interval.
    Even although the costs of petrol and diesel are deregulated and may be revised day by day, OMCs had, in March and April, halted hikes as a lot of states went to elections.
    OMCs had additionally held costs fixed for over 80 days final yr from March 16, as crude fell sharply because of the Covid pandemic. Experts mentioned the choice to carry costs regular, throughout the interval when crude touched lows of round $20 per barrel, led to far increased advertising margins for OMCs throughout FY21.

    OMCs have additionally held the value of petrol fixed for the previous 34 days and reduce the value of diesel by about 60 paise per litre over the previous three days after holding regular for 33 days. Petrol is retailing at Rs 101.8 per litre within the Capital, whereas diesel is at Rs 89.27.
    High crude costs, coupled with elevated taxes on gasoline, have led to a 21.7 per cent improve within the pump worth of petrol and a 20.8 per cent soar in diesel for the reason that starting of the yr. Elevated taxes on petrol and diesel have additionally been key contributors to report excessive costs. Last yr, the Centre hiked Central levies by Rs 13 per litre on petrol and Rs 16 on diesel to shore up revenues as Covid brought about a pointy fall in financial exercise.

    “The government wants to ensure that the earnings of OMCs are protected as they are key investors in important infrastructure such as pipelines, new refineries and LPG infrastructure,” mentioned Vivekanand Subbaraman, analyst at Ambit Capital. He added margins for OMCs had been rising steadily over the previous few years as their income had been rising despite the fact that their gross sales volumes had remained comparatively steady.
    Indian Oil Corporation Ltd, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd didn’t reply to emailed requests for remark.

  • 20% ethanol mixing: Target 2025, 5 years early

    Prime Minister Narendra Modi Saturday superior the nation’s goal of 20 per cent ethanol mixing in petrol by 5 years to 2025, from 2030.
    “This purpose (of 20 per cent ethanol mixing) was earlier set at 2030. But seeing the type of strides that the nation has made up to now seven years, we have now determined to scale back the timeline by 5 years,’’ Modi mentioned on the launch of a pilot venture for allotting ethanol from three petrol stations in Pune.
    The Prime Minister additionally launched a report of an inter-ministerial committee which lays out a complete roadmap for the event of the ethanol sector. So far, ethanol was being produced in sugar rising states, however now will probably be produced throughout the nation with the establishing of foodgrain waste distilleries and agricultural waste ethanol vegetation, he mentioned.
    The authorities had final yr set a goal of 10 per cent ethanol mixing in petrol by 2022 and 10 per cent ethanol mixing in diesel by 2030. In 2020-21, oil advertising firms (OMCs) raised the proportion of ethanol blended in petrol to eight.5 per cent from 5 per cent within the earlier yr. The procurement of ethanol by OMCs virtually doubled to 332 crore litres from 173 litres within the earlier fiscal.
    The Prime Minister mentioned the elevated deal with use of ethanol as a gasoline was positively impacting the setting in addition to the lives of farmers. “In 2013-14, 38 crore litres of ethanol was purchased, immediately over 320 crore litres is purchased – greater than eight instances. This is price Rs 21,000 crores – a variety of this has gone to the farmers, particularly our sugarcane farmers. When we obtain 20 per cent ethanol mixing, think about how a lot cash farmers will make,’’ he mentioned.
    Ethanol mixing may also, to a big extent, resolve the issue of agricultural waste in addition to sugar charges plummeting as a result of extra manufacturing, due to this fact offering safety to sugarcane farmers, Modi mentioned.
    The procurement of ethanol by OMCs is ruled by an administered pricing mechanism that fixes costs yearly based mostly on the uncooked materials used. Fixing of the value of uncooked supplies for manufacturing had led to India producing ethanol at costs larger than different international locations, the report mentioned.
    The worth of ethanol manufacturing in India ranges from $0.63 – $0.87 a litre, considerably larger than the US and Brazil the place it’s about $ 0.61 per litre.
    The report additionally highlighted the extreme use of water — estimated at 2,860 litres — for the manufacturing of 1 litre of ethanol from sugar. There was a necessity to maneuver to extra environmentally sustainable crops, it mentioned.
    In the earlier fiscal, 87 per cent of ethanol used for India’s ethanol mixing program was produced utilizing sugar.

  • Diesel gross sales report uptick for first time since Oct 2020

    Petrol and diesel gross sales by state-owned oil advertising and marketing corporations (OMCs) rose 27.4 per cent and 28.6 per cent, respectively, final month resulting from low base in March 2020 which was hit by the beginning of Covid-19-related journey restrictions.
    Sales of the 2 fuels had crashed in March 2020 as the federal government imposed journey restrictions to regulate the unfold of Covid-19.
    Petrol gross sales recovered to pre-Covid ranges final September and have continued to develop nearly every month amid an rising choice for private mobility.
    However, diesel gross sales — an indicator of commercial exercise — have grown for the primary time since October, when gross sales was excessive as a result of festive season.
    Petrol gross sales final month was at 2,475 thousand metric tonnes (TMT), up from 1,943 TMT in March 2020.
    The 6,406-TMT of diesel gross sales by Indian Oil Corporation Ltd, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd was, nonetheless, nonetheless down 4.7 per cent in comparison with March 2019, as per knowledge reviewed by The Indian Express.
    Experts stated the resurgence of Covid-19 and journey restrictions to fight the unfold in components of the nation may additionally hit restoration of diesel consumption going ahead.

    “Businesses may try to localise their supply chains at a state level and prefer suppliers who are nearby over suppliers who are in far-flung areas,” stated Vivekanand Subbaraman, an analyst at Ambit Capital.
    Meanwhile, consumption of aviation turbine gas fell to 437 TMT final month from 457 TMT in March 2020 and that of LPG to 2,264 TMT from 2,292 TMT.

  • Petrol, diesel costs contact all-time highs in Delhi

    Image Source : PTI Petrol, diesel costs contact all-time highs in Delhi
    Petrol and diesel costs in Delhi touched new all-time highs on Thursday with oil advertising and marketing corporations (OMCs) elevating pump costs by 35 paise a litre. Now, petrol per litre prices ₹86.65 whereas Diesel costs are up by 35 paise a litre, promoting at ₹76.83 a litre within the nationwide capital. Earlier, petrol and diesel charges have been ₹86.30 and ₹76.48, prevailing within the nationwide capital since January 27.
    The gasoline costs elevated near 35 paise per litre, however the precise quantity different from state to state relying on their native levies.
    Though agency international crude and product costs led to rising in retail costs of petrol and diesel, it’s attention-grabbing to notice that though the crude has been hovering simply over $55 a barrel for a very long time, OMCs had paused improve in costs of auto fuels. The current improve comes after over $3 a barrel improve in crude costs in just some days.
    Crude value have remained agency for the previous few weeks within the wake of unilateral manufacturing cuts introduced by Saudi Arabia and a pick-up in consumption in all main economies globally.
    Petrol and diesel costs have elevated 11 occasions in 2021, with the 2 auto fuels rising by Rs 2.94 and Rs 2.96 per litre respectively to date.

    The previous couple of will increase in pump costs in petrol and diesel have taken them to report ranges in all main metro cities and cities throughout the nation. The final time the retail costs of auto fuels have been nearer to present ranges have been on October 4, 2018 when crude costs had shot as much as $80 a barrel.
    The present value rise is essentially on account of steep improve in central taxes on petrol and diesel, other than agency crude costs internationally. The Union Budget 2021-22 has additionally imposed a brand new agricultural infrastructure and growth cess on the fuels.
    Petrol costs have been very near breaching an all-time excessive of Rs 84 a litre (reached on October 4, 2018) when these touched Rs 83.71 on December 7, 2020. But the upward march was halted ever since as no value revision was introduced by the Indian OMCs within the month. The value uptick began once more solely on January 6.
    Oil corporations’ executives mentioned that petrol and diesel costs could improve additional within the coming days as retail costs could must be balanced in step with international developments to forestall the OMCs from shedding cash on the sale of auto fuels.
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  • Fuel on Fire! Petrol costs in Delhi hit new excessive at ₹85.45; Mumbai at ₹92.04. Check revised charges

    Image Source : PTI Fuel on Fire! Petrol costs in Delhi hit new excessive at ₹85.45; Mumbai at ₹92.04. Check revised charges
    Petrol and diesel costs rose once more by 22-27 paise per litre on Friday after oil advertising firms (OMCs) determined to proceed the upward value revision of auto fuels, after protecting charges static for 2 days. Following at the moment’s fee revision, petrol costs had been hiked by 22-25 paise a litre whereas the worth of diesel was raised by 23-27 paise throughout main metro cities of the nation.

    Petrol in Delhi has touched all-time excessive and prices Rs 85.45 per litre whereas diesel is retailing at Rs 75.63 per litre, 25 paisa greater than the earlier value, as per information from Indian Oil Corporation web site. Cost of petrol per litre in Mumbai can be at its report excessive of Rs 92.04 whereas a litre of diesel prices Rs 82.40.

    In Kolkata, the petrol value was hiked by 24 paise to Rs 86.87 a litre. Diesel prices Rs 79.23 a litre. On the opposite hand, in Chennai, the retail costs of petrol and diesel are Rs 88.07 (22 paise improve) a litre and Rs 80.90 (23 paise extra) a litre respectively.

    Today’s Petrol Price in Metro Cities (Source: Good Returns)

    City
    Today Price (Jan 22)
    Yesterday’s Price
    New Delhi
    ₹ 85.45
    ₹ 85.20
    Kolkata
    ₹ 86.87
    ₹ 86.63
    Mumbai
    ₹ 92.04
    ₹ 91.80
    Chennai
    ₹ 88.07
    ₹ 87.85
    Gurgaon
    ₹ 83.60
    ₹ 83.16
    Noida
    ₹ 84.85
    ₹ 84.94
    Bangalore
    ₹ 88.33
    ₹ 88.07
    Bhubaneswar
    ₹ 86.49
    ₹ 85.93
    Chandigarh
    ₹ 82.28
    ₹ 82.04
    Hyderabad
    ₹ 88.89
    ₹ 88.63
    Jaipur
    ₹ 92.81
    ₹ 93.06
    Lucknow
    ₹ 84.94
    ₹ 84.73
    Patna
    ₹ 87.95
    ₹ 87.71
    Trivandrum
    ₹ 87.48
    ₹ 87.28
    This is the third value hike in final 20 days as oil advertising firms introduced hike of Rs 0.23 for petrol and Rs 0.26 diesel per litre on January 7. The costs of petrol and diesel have elevated by Rs 1.74 and Rs 1.76 per litre thus far respectively in Delhi.

    The value hike got here on account of the resumption of every day value revisions by state-owned gas retailers like Indian Oil Corporation Ltd (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) beginning January 6 after almost a month-long hiatus.
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