New Delhi: Petroleum minister Hardeep Singh Puri on Tuesday said public sector oil marketing companies may not be able to bear the daily losses of Rs 1,000 crore incurred from selling petrol and diesel below the market price, a strong indication that pump prices are going to rise in the coming days.“To protect the consumer, they are incurring losses. (But) at some level the government will have to take a decision,” Puri said without explicitly commenting on the much-awaited price hike at CII’s annual business summit.“How long will the oil companies be able to withstand this (losses)? Frankly, this is something that worries me,” he said. The minister said oil retailers are under financial pressure and facing under-recoveries of Rs 2 lakh crore and losses of Rs 1 lakh crore in the April-June quarter, which could wipe out last year’s annual profit. The only way for the government to avoid taking “drastic measures” is if the Strait of Hormuz reopens and the price of the crude oil basket falls to $70 a barrel.

Crude oil prices have risen nearly 50% since the war broke out on February 28, surpassing $100 a barrel. Puri rejected suggestions that the price hike was deliberately postponed due to assembly elections in Tamil Nadu, Kerala and West Bengal, saying there have been several elections since 2022, when fuel rates were last increased. “It’s not my case that prices…shouldn’t go up. I’m saying the two are unrelated,” he said. He said India was the only country to keep fuel prices stable for four years.The price of petrol and diesel in the capital is currently Rs 94.77 and Rs 87.67 per liter respectively. According to estimates, OMC – Indian Oil CorporationBharat Petroleum and Hindustan Petroleum – are incurring a loss of Rs 14 per liter on petrol, Rs 42 per liter on diesel and Rs 674 on domestic LPG cylinder. Their collective under-recovery is estimated to be Rs 1,600-1,700 crore per day. Seeking to allay fears of shortage, Puri said despite the disruption in energy flows, there is no supply-side problem and the country has 60 days of crude oil and LNG stock and 45 days of LPG stock. He acknowledged the need to increase reserves and said a company was acquiring 400-500 acres of land for additional storage. On domestic oil and gas exploration, Puri said the government has amended exploration rules and expanded the acreage offered under the licensing round. The Center has also reduced effective royalty rates on crude oil and natural gas production to boost domestic exploration and production. As per the notification, the effective royalty on onshore crude oil production has been reduced to 10%, while offshore crude royalty has been reduced to 8%. Royalty on natural gas has also been reduced to 8%.