A view of Bharat Petroleum Corporation Ltd refinery in Mumbai.
Credit: Reuters Photo
New Delhi: State-owned fuel retailers Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL)and Hindustan Petroleum Corporation Ltd (HPCL) reported bumper profits totalling about Rs 81,000 crore in FY24, which far exceeded their annual earning in pre-oil crisis years.
The combined standalone net profit of IOC, BPCL and HPCL in April 2023 to March 2024 (FY24) was better than their annual earning of Rs 39,356 crore in pre-oil crisis years, regulatory filings by them showed.
All the three companies posted the highest ever standalone as well as consolidated net profit in FY24.
The retailers have resisted calls to revert to daily price revision and pass on softening in rates to consumers on grounds that prices continue to be extremely volatile - rising on one day and falling on the other - and that they needed to recoup losses incurred in the year when they kept rates lower than cost.
IOC in 2023-24 posted a standalone net profit of Rs 39,618.84 crore, according to the company's regulatory filing. This is compared with Rs 8,241.82 crore annual net profit in 2022-23.
While the company could argue that FY23 was impacted by the oil crisis, the FY24 earnings are higher than even the pre-crisis years - Rs 24,184 crore net profit in 2021-22 and Rs 21,836 crore in 2020-21.
BPCL posted a net profit of Rs 26,673.50 crore in FY24, higher than Rs 1,870.10 crore earning in 2022-23 and Rs 8,788.73 crore in FY22. HPCL's 2023-24 profit of Rs 14,693.83 crore is compared with a Rs 8,974.03 crore loss in FY23 and a profit of Rs 6,382.63 crore in 2021-22, according to the filings.
The losses in FY23 led to Finance Minister Nirmala Sitharaman announcing Rs 30,000 crore for IOC, BPCL and HPCL to support their energy transition plans in her budget for 2023-24.
Mid-way through the year, that support was halved to Rs 15,000 crore. The support which was to happen by way of equity infusion via a rights issue, hasn't been given yet.
The three companies, which control roughly 90 per cent of India's fuel market, 'voluntarily' have not changed petrol, diesel and cooking gas (LPG) prices for the past two years, resulting in losses when input cost was higher and profits when raw material prices were lower.
They posted a combined net loss of Rs 21,201.18 crore during April-September 2022 despite accounting for Rs 22,000 crore announced but not paid LPG subsidy for the previous two years.
Subsequent softening of international prices and government giving out LPG subsidy helped IOC and BPCL post annualised profit for 2022-23 (April 2022 to March 2023) but HPCL was in the red.
In FY24, things have changed dramatically. The three firms posted record earnings in the first two quarters (April-June and July-September) when international oil prices - against which domestic rates are benchmarked - almost halved to Rs 6,014.95 ($72) a barrel from a year ago.
International prices rose again in the subsequent quarter to USD 90, leading to moderation of their earnings. But, on a year as a whole they had rich profits.
The fuel price freeze that began on April 6, 2022, had a loss as high as Rs 17.4 a litre on petrol and Rs 27.7 per litre on diesel for the week ended June 24, 2022.
However, subsequent softening led to losses being eliminated. And in mid-March, they cut petrol and diesel prices by Rs 2 per litre each just before general elections were announced.
International oil prices have been turbulent in the last couple of years. It dipped into the negative zone at the start of the pandemic in 2020 and swung wildly in 2022 - climbing to a 14-year high of nearly Rs 11,695.74 ($140) per barrel in March 2022 after Russia invaded Ukraine, before sliding on weaker demand from top importer China and worries of an economic contraction.
But for a nation that is 85 per cent dependent on imports, the spike meant adding to already elevated levels of inflation and derailing the economic recovery from the pandemic.
So, the three fuel retailers froze petrol and diesel prices for the longest duration in the last two decades.
They stopped daily price revision in early November 2021 when rates across the country hit an all-time high, prompting the government to roll back a part of the excise duty hike it had affected during the pandemic to take advantage of low oil prices.
The freeze continued into 2022 but the war-led spike in international oil prices prompted a Rs 10 a litre hike in petrol and diesel prices from mid-March 2022 before another round of excise duty cut rolled back all of the Rs 13 a litre and Rs 16 a litre increase in taxes on petrol and diesel done during the pandemic.
That followed the current price freeze which began on April 6, 2022, and continued till March 15 reduction. Thereafter there has been a freeze in rates again.