State oil cos'fuel marketing margin rises 114%

State oil companies’ marketing margin on petrol and diesel has more than doubled from the last quarter as domestic fuel prices have barely followed the sharp decline in global rates this month.Net marketing margin on auto fuel has surged to ₹3.08 per litre in the second quarter so far, up 114% from ₹1.43 per litre in the April-June period, as per brokerage ICICI Securities.The margin had plunged to minus 97 paise per litre on May 3 due to the rise in international auto fuel prices. “However, price hike of ₹9.3-11.4 per litre since May 3 in diesel and petrol, and fall in international prices since then meant that net marketing margin has recovered to ₹3.43 per litre on Aug 26,” the brokerage said in its report on Friday.85706293Marketing margins touched a record high of ₹3.05 per litre in 2020-21, having risen steadily from Rs 1.06 in 2017-18. The margin for the current financial year so far is at ₹2.06 per litre.State oil companies are expected to revise prices of petrol and diesel daily in line with the rolling fortnightly average of international rates. But very often they avoid it, resulting in sharp variations in their marketing margins.To avoid political backlash, state oil companies tend to cut prices or avoid increases ahead of election, or when the parliament is in session. This puts pressure on their margins. To make up for this, companies tend to expand margins at other times.State companies have cut domestic prices by a very small amount this month while international prices have fallen sharply. Global prices are again rising, with crude recovering to $72 a barrel from $65 in just a week. Domestic companies also want to have fewer price changes to reduce public conversations around fuel prices.

from Economic Times https://ift.tt/3zpkurF