India has 2 months stock of fuel, but...: Oil minister

With two months of fuel stockpiles, India faces no supply concerns despite disruptions to global energy flows, Oil Minister Hardeep Singh Puri on Tuesday said, while warning that state-run fuel retailers face losses of as much as Rs 1 lakh crore in a single quarter if elevated crude prices persist and retail fuel prices remain unchanged.

He said that at some stage an assessment needs to be made on how long retailers can sustain losses from selling petrol, diesel and cooking gas LPG below cost, but refused to speculate if rates would be raised anytime soon.

"We have no supply-side problems," the minister said at CII's Annual Business Summit here, adding that India began the crisis with "more than enough" crude oil and LPG inventories and had since ramped up domestic LPG production to 54,000 tonnes per day from about 36,000 tonnes previously.

At the same time, the minister acknowledged growing fiscal stress from keeping retail fuel prices unchanged.

"My oil companies are losing Rs 1,000 crore a day," he said, adding that cumulative under-recoveries had climbed to nearly Rs 1.98 lakh crore and that a single quarter of losses of Rs 1 lakh crore could wipe out the sector's annual profits.

Since the war broke out in West Asia 10 weeks ago, state-owned oil marketing companies (OMCs) have ensured uninterrupted supplies of petrol, diesel and cooking gas LPG at rates that are way below the cost, unlike many global energy systems that imposed rationing or passed through steep price increases.

This has resulted in the three OMCs - Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) - running record-high under-recoveries (the difference between benchmark international cost and retail selling price).

Puri said the combined under-recovery on petrol, diesel and cooking gas LPG is about Rs 1.98 lakh crore for the current quarter, while the actual loss is about Rs 1 lakh crore.

The losses in one quarter, he said, are enough to wipe out profits that oil companies earn in the entire year. -- PTI