Home / Business and Economy / Oil Companies Seek ₹75,000 Crore Loss Payout
Oil Companies Seek ₹75,000 Crore Loss Payout
22 Jul
Summary
- OMCs seek ₹75,000 crore compensation for Q1 losses.
- Fuel sales below market rates led to significant financial strain.
- Government faces difficult decision on compensation package.
State-run oil marketing companies (OMCs) are requesting approximately ₹75,000 crore from the government to cover losses incurred in the April-June quarter. Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp have been selling fuel below market rates since late February, exacerbated by renewed West Asia conflict which pushed crude oil prices above $90 a barrel.
The companies have signaled that these losses are substantial and cannot be absorbed without immediate financial assistance. The proposal for compensation will require approval from the finance ministry and is anticipated to involve lengthy inter-ministerial discussions.
Previously, the government compensated OMCs for LPG losses, providing ₹22,000 crore in 2022 and ₹30,000 crore last year. However, compensation for petrol and diesel losses has been avoided to uphold deregulation principles and prevent similar claims from private retailers.
An earlier proposal in February 2023 for a ₹30,000 crore equity infusion was met with little enthusiasm by the OMCs, who preferred direct compensation. As crude prices subsequently eased, the equity infusion plan was dropped.
