Fuel Sector Crisis: Jio-BP And Naira Energy In Huge Loss

Fuel Sector Crisis: Private companies retailing petrol and diesel is troubled by the loss, and by writing a letter, pleading with the government.

Despite the rise in crude oil prices, the fuel retailing companies are incurring huge losses due to non-increasing prices.

Companies like Jio-BP and Naira Energy claim that they are incurring a loss of Rs 20 to 25 per liter on the sale of diesel and Rs 14 to 18 on petrol.

The companies have written to the Petroleum Ministry, seeking the government to create an equitable investment environment.

It has also warned that if this does not happen, then investment in the retail business of selling fuel will be limited.

Fuel Sector Crisis: The Federation of Indian Petroleum Industry (FIPI) had written this letter to the ministry on June 10.

FIPI counts Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL) as its members, apart from private sector companies.

In fact, international crude oil and its product prices have hit a decade high, but state-run fuel retailers have ‘frozen’ petrol and diesel prices.

Government companies account for 90 percent of the fuel retail business. At present, the fuel prices are only two-thirds of the cost, which is hurting private companies.

This poses an existential crisis for Jio-BP, Rosneft-backed Naira Energy, and Shell.

If private companies increase prices, they will have to lose customers. If companies sell fuel only at the price fixed by the government, it will affect their balance sheet.

FIPI Director-General Gurmeet Singh has written in the letter that the retail prices of fuel have not increased since April 6.

Whereas the price of fuel sold to bulk buyers like state transport undertakings has increased in line with international prices.

FIPI said that due to this a large number of wholesale buyers are buying from retail outlets, due to which the loss of private sector companies is increasing.

Let us tell you that there was no increase in the retail selling price for petrol and diesel for a record 137 days between the beginning of November 2021 and March 21, 2022, despite the increase in crude oil prices.

With effect from March 22, 2022, the retail selling price was increased by an average of 80 paise per liter per day on 14 occasions, leading to an increase of Rs 10 per liter in both petrol and diesel prices.