OMCs shift burden to refiners amid rising crude oil costs
Standalone refiners face margin squeeze as OMCs absorb retail losses
image for illustrative purpose
New Delhi: In an unprecedented move since fuel price deregulation, state-run oil marketing companies (OMCs) have begun paying discounted rates to refiners to cushion mounting losses from a prolonged freeze in petrol and diesel prices.
With global crude prices surging past USD 100 per barrel following geopolitical tensions, domestic retail prices have remained unchanged, forcing OMCs to absorb steep under-recoveries. To manage this, OMCs have imposed discounts on refinery transfer prices (RTP), the internal benchmark for fuel sales from refiners to marketers, effectively lowering payouts to refiners.
For the second half of March, diesel saw a discount of ₹22.34 per litre, while in early April, the cut widened sharply to over Rs60 per litre. Similar reductions have been applied to aviation turbine fuel (ATF) and kerosene.
The move spreads the financial burden across the fuel supply chain but hits standalone refiners such as MRPL, CPCL, and HMEL the hardest, as they lack retail operations to offset losses. Integrated players like IOC, BPCL, and HPCL can partly balance the impact across refining and marketing segments.
Private refiners including Reliance Industries and Nayara Energy could also be affected if the discounted pricing mechanism is extended to them, as they sell significant volumes to OMCs.
