After nearly two years, the state-owned oil companies have started making profits on petrol sales, but not diesel or cooking fuel, with the Indian basket of crude oil falling below $60 a barrel on Friday, the last date for which data is available.
The government, however, has ruled out a fuel price cut for now. "Oil prices have to hold at this level for at least a month before we think of cutting fuel prices. We will review the situation after November 15," said S Sundareshan, additional secretary in the oil ministry.
With elections scheduled in four states starting next month, however, it is possible that the political pressure within government for a fuel price cut may grow.
The ministry and oil marketing companies Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation say the depreciating value of the Indian rupee against the dollar has lowered the break-even point on subsidised fuel sales to $55 per barrel from the earlier $61 per barrel.
The rupee has depreciated 6.65 per cent to below Rs 50.09 per dollar on Monday. The Indian currency has dipped 13.3 per cent since the beginning of September.
Every one rupee depreciation against the US dollar increases the under-realisation of the oil companies by Rs 8,400 crore on an annualised basis.
Crude oil prices have dipped nearly 60 per cent over the last three months. This has helped the oil companies reduce their under-realisations -- from sale of petrol, diesel, kerosene and cooking gas at below production cost -- to Rs 147,000 crore for the current financial year from around Rs 245,000 crore in June.
For the oil marketing companies, petrol sales constitute 9 per cent of total sales.
These three firms were making a loss of Rs 2.85 per litre of petrol until a fortnight ago.
"At the current price of crude, margins on petrol are positive. But we are still making losses on the other three subsidised fuels like diesel, LPG for domestic consumers and kerosene," said a senior official with HPCL, which controls around 25 per cent of the fuel retail market.
The basket of crude oil that Indian refiners buy plunged to a 21-month low of $58.2 a barrel Friday. Prices are projected to fall further as global prices continue to slide on falling demand in economies that are slowing down.
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