Govt Rules Out Financial Aid for Fuel Retailers Losses on Petrol, Diesel and ATF

State-owned fuel retailers are facing sustained margin pressure as rising global crude prices continue to outpace domestic retail fuel rates. Despite this, the government has indicated that it does not intend to step in with financial support. 

No Support Despite Mounting Losses 

As per PTI report, Sujata Sharma, Joint Secretary in the Ministry of Petroleum and Natural Gas, said “there is no proposal…to support oil marketing companies,” even as losses continue to build. 

State-run firms including Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited are selling petrol and diesel below cost. Under-recoveries are estimated at ₹25–28 per litre, driven by elevated crude prices following the West Asia conflict over the past 2 months. 

The companies have also started reporting losses on aviation turbine fuel for the first time in more than 2 decades, as only partial price increases have been passed on. 

Price Freeze and Selective Increases 

Retail prices of petrol, diesel and domestic LPG have remained unchanged, even as supply disruptions have pushed input costs higher. Sharma said “consumer interest has been kept in mind,” highlighting the focus on controlling inflation. 

In contrast, price revisions have been implemented in segments with limited consumer exposure. Bulk diesel prices have increased from around ₹137 per litre to over ₹149 per litre, compared to ₹87.62 per litre for retail diesel.  

Similarly, commercial LPG used by hotels and restaurants has been raised by ₹993 to ₹3,071.50 per 19-kg cylinder. 

The 5-kg market-priced LPG cylinder has also seen a sharp rise from ₹549 to ₹810.50, approaching the ₹913 price of a 14.2-kg domestic cylinder. These non-retail segments together account for only about 10% of total fuel consumption. 

ATF and LPG Pricing Dynamics 

Aviation fuel pricing shows a divergence between domestic and international carriers. ATF for international airlines was increased by $76.55 per kilolitre, or 5.33%, to $1,511.86 per kl, following an earlier rise to $1,435.31 per kl on April 1.  

However, ATF for domestic airlines has been held at ₹1,04,927.18 per kl, with oil companies absorbing the difference.

Domestic LPG prices were increased by ₹60 per 14.2-kg cylinder on March 7, but this has not fully offset rising costs, leaving companies with continued under-recoveries. 

Policy Focus and Sector Impact 

The government’s approach remains centred on limiting inflationary pressures and protecting end consumers, even if it results in financial strain for fuel retailers. Sharma noted that these pricing decisions are aimed at stabilising the broader economy. 

Read More: Crude Oil Prices Ease as Strait of Hormuz Developments Weigh on Markets! 

Conclusion 

With no financial relief expected, oil marketing companies are likely to continue bearing the impact of elevated crude prices and restricted pricing flexibility, as policy priorities remain focused on consumer protection and inflation management. 

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