In a primary since fuel price deregulation, state-run oil advertising firms (OMCs) will pay refineries a discounted price for petrol, diesel, aviation turbine fuel (ATF) and kerosene to restrict mounting losses from a self-imposed freeze on retail fuel costs, sources mentioned.
The OMCs on March 26 fastened rates for petroleum merchandise which might be at a reduction of up to ₹60 per litre to their imported price, two individuals with direct information of the matter mentioned. The discounted rates, that are relevant with impact from March 16, will hit standalone refiners akin to MRPL, CPCL and HMEL essentially the most.
International oil costs have risen from about $70 per barrel earlier than the West Asia battle to over $100, however retail petrol and diesel costs in India have remained unchanged, forcing OMCs to take in the affect.
With no quick finish to the battle in sight, OMCs have determined to repair a reduction on the refinery switch price (RTP) — the interior price at which refineries promote fuel to advertising arms — to successfully pay refineries lower than the import-parity price of the fuels akin to petrol and diesel.
For the second half of March, a reduction of ₹22,342 per kilolitre (₹22.34 per litre) was fastened on diesel to carry down the RTP of ₹85,349 per kl to ₹63,007 per kl.
For the primary fortnight of April, the low cost on diesel has been fastened at ₹60,239 per kl to decrease RTP from ₹1,46,243 per kl to ₹86,004 per kl.
On ATF, the RTP has been slashed to ₹76,923 per kl from ₹1,27,486 per kl after contemplating a reduction of ₹50,564 per kl.
The RTP for kerosene after a reduction of ₹46,311 per kl has been fastened at ₹77,534 per kl from ₹1,23,845 per kl, they mentioned.
Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp didn’t instantly reply to requests for remark.
The discounted pricing would forestall refiners from absolutely passing on increased crude prices by way of RTP, forcing them to take in a part of the affect of elevated international oil costs.
While built-in state-run corporations akin to Indian Oil Corporation Ltd (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) can offset a part of the hit between refining and advertising operations, standalone refiners that depend on market-linked RTP for income might face a sharper margin squeeze, they mentioned.
Mangalore Refinery and Petrochemicals Ltd (MRPL), Chennai Petroleum Corporation Ltd (CPCL) and HPCL-Mittal Energy Ltd (HMEL) — which have negligible retail presence and promote a lot of the petrol and diesel produced to the three OMCs — could be essentially the most hit by the transfer.
The modifications would additionally affect refiners like Nayara Energy and Reliance Industries Ltd if the low cost on RTP can be carried out for personal refiners, sources mentioned.
The two personal refiners promote a bulk of their manufacturing of petrol and diesel to OMCs, who personal and function 90% of the over 1 lakh petrol pumps within the nation.
Import parity foundation
Traditionally, petrol and diesel in India have been priced on an import parity foundation, that means the fuels are valued as in the event that they have been imported, although it’s primarily crude oil that’s introduced into the nation and refined regionally. Refinery transfers of those merchandise to oil advertising firms have been based mostly on import parity price (IPP) till June 2006, after which the federal government adopted commerce parity pricing (TPP) — a benchmark that assigns 80% weight to import parity price and 20% to export parity price.
This pricing protected refinery margins, significantly of standalone refiners who did not have the cushion of selling margins on petrol and diesel, whose pricing was deregulated by the federal government in 2010 and 2014 respectively.
Despite being freed, petrol and diesel costs haven’t precisely moved according to price and have been frozen since April 2022, with OMCs absorbing losses when crude oil costs rise and making bumper income when rates fall.
The low cost on RTP comes as under-recoveries or losses on petrol and diesel have widened, sources mentioned, including not like cooking fuel LPG, the federal government doesn’t compensate OMCs for losses on auto fuels.
The Ministry of Petroleum and Natural Gas in a publish on X on April 1 had acknowledged that, “With global petroleum prices up by up to 100% in the last one month, PSU OMCs are incurring under-recoveries of ₹24.40 per litre on petrol and ₹104.99 per litre on diesel at retail selling price (RSP) level as on April 1, 2026.” OMCs really feel the freezing RTP would successfully distribute the monetary burden throughout the refining ecosystem, however analysts say it might disproportionately have an effect on impartial refiners with restricted downstream advertising publicity.
Also, it’ll distort the dedication of market price to standalone and personal refiners, sources added.
Published – April 06, 2026 12:36 am IST