No bailout for oil firms: Govt rules out financial support despite mounting fuel losses

The Union government has ruled out any immediate financial support to state-run oil marketing companies (OMCs), even as they continue to incur losses on the sale of petrol, diesel, and aviation turbine fuel (ATF).

A senior official from the Petroleum Ministry said there is no proposal at present to compensate OMCs for selling fuels below market-linked prices.

Public sector companies — including Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation — are facing increasing financial pressure as they sell fuels at rates that have not kept pace with global crude prices.

Retail prices of petrol and diesel have remained largely unchanged for over four years, even as international oil prices have surged due to geopolitical tensions, particularly the ongoing West Asia crisis.

As a result, these companies are reporting significant under-recoveries and have been pushing for price revisions.

While retail fuel prices remain frozen, some adjustments have been made in other segments.

Only about 25% of the required price increase in jet fuel for domestic flights was passed on earlier, while international carriers saw a full adjustment.

Similarly, fuel retailers have increased prices for industrial and bulk consumers, including diesel and LPG, even as household and retail consumers continue to be shielded from price hikes.

Officials indicated that keeping retail fuel prices stable has helped contain inflation, a key concern amid rising global energy costs.

The timing of the global price surge — coinciding with recent Assembly elections — also made fuel price hikes politically sensitive, contributing to the continued freeze on retail rates.

Unlike petrol and diesel, the government has in the past provided subsidy support to OMCs for losses on domestic LPG sales. Officials suggest such support could be considered again, even though no relief is planned for transport fuels at this stage.