India's Oil Marketing Companies Face ₹80,000 Crore LPG Losses in FY27: ICRA
OMCs may face Rs 80,000 crore LPG under-recovery in FY27: ICRA
Business Standard
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India's state-run oil marketing companies (OMCs) may incur under-recoveries of approximately ₹80,000 crore on liquefied petroleum gas (LPG) sales in FY27, according to ICRA. The surge in international LPG prices and ongoing supply constraints, particularly due to geopolitical tensions, are contributing to these losses.
- 01OMCs could face ₹80,000 crore in LPG under-recoveries in FY27.
- 02Current losses on petrol and diesel sales are ₹14 and ₹18 per litre, respectively.
- 03Supply issues and international price surges are impacting profitability.
- 04Fertiliser sector subsidy requirements are projected between ₹2.05 trillion and ₹2.25 trillion.
- 05Disruptions in the Strait of Hormuz are affecting global oil and LNG trade.
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According to ICRA, India's state-run oil marketing companies (OMCs) may experience under-recoveries of around ₹80,000 crore on liquefied petroleum gas (LPG) sales in FY27 if current loss levels persist. The surge in international LPG prices, driven by blocked supplies from West Asia, has exacerbated the situation. Currently, OMCs are incurring losses of ₹14 per litre on petrol and ₹18 per litre on diesel due to crude prices hovering between $120 and $125 per barrel. This situation is expected to impact the profitability of key downstream sectors, including oil marketing, fertiliser, and city gas distribution (CGD). The fertiliser sector, in particular, is facing significant cost pressures due to rising sulphur and ammonia prices, with subsidy requirements estimated between ₹2.05 trillion and ₹2.25 trillion for FY27. Additionally, the ongoing conflict in West Asia and disruptions in the Strait of Hormuz have raised prices across various commodities, further straining the profitability of these sectors.
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The projected LPG under-recoveries could lead to increased fuel prices for consumers and heightened costs for related sectors, affecting overall economic stability.
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