For the primary time since gasoline worth liberalization, state-owned oil advertising firms (OMCs) pays discounted costs for petrol, diesel, aviation turbine gasoline (ATF) and kerosene to refineries to curb mounting losses as a consequence of a voluntary freeze on retail gasoline costs, sources mentioned.
On March 26, the OMC set a reduction of as much as 60 rupees per liter on the import worth of petroleum merchandise, two folks aware of the matter mentioned. The discounted tariffs, which will likely be relevant from March 16, will hit impartial refiners resembling MRPL, CPCL and HMEL the toughest.
Whereas worldwide crude oil costs have risen to greater than $100 a barrel from round $70 a barrel earlier than the West Asian battle, retail costs for petrol and diesel in India stay unchanged and OMCs should soak up the affect.
With no fast finish to the dispute in sight, the OMC has determined to repair reductions on refinery switch pricing (RTP) – the inner worth at which refineries promote gasoline to advertising departments – to pay refineries a worth that’s considerably decrease than the import parity value of fuels resembling oil and diesel.
Within the second half of March, a reduction of ₹22,342 per kilolitre (₹22.34 per liter) was utilized to diesel, decreasing the RTP to ₹85,349 per kilolitre.
For the primary two weeks of April, diesel low cost will likely be mounted at ₹60,239 per kl and RTP will come down from ₹1,46,243 per kl to ₹86,004 per kl.
At ATF, RTP has been lowered from ₹1,27,486 per kl to ₹76,923/kl after factoring in a reduction of ₹50,564 per kl.
It mentioned RTP for kerosene was mounted at ₹ 1,23,845 to ₹ 77,534 per kilolitre after low cost of ₹ 46,311 per kilolitre.
Indian Oil Company, Bharat Petroleum Company and Hindustan Petroleum Company didn’t reply to requests for remark.
Discounted costs forestall refineries from absolutely passing on larger oil prices via RTP, forcing them to soak up a few of the affect of upper international oil costs.
Whereas built-in state-owned enterprises resembling Indian Oil Company (IOC), Bharat Petroleum Company (BPCL) and Hindustan Petroleum Company (HPCL) can offset a few of the hit between refining and advertising operations, impartial refiners that depend on market-linked RTP for income could face steeper margin strain, they mentioned.
Mangalore Refineries and Petrochemicals Ltd (MRPL), Chennai Petroleum Company Ltd (CPCL) and HPCL Mittal Vitality Ltd (HMEL), which have little retail presence and promote many of the petrol and diesel produced to the three OMCs, will likely be hit hardest by the transfer.
The change can even affect refiners resembling Nayara Vitality and Reliance Industries, if RTP reductions are additionally applied for personal refiners, officers mentioned.
The 2 personal refiners promote most of their gasoline and diesel manufacturing to OMCs, which personal and function 90% of the nation’s greater than 100,000 gasoline pumps.
Import parity foundation
Historically, petrol and diesel in India have been priced on an import parity foundation. Which means regardless that it’s primarily crude oil that’s introduced into India and refined domestically, the gasoline is valued as if it have been an import. The switch of those merchandise from refineries to grease advertising firms was based mostly on import parity pricing (IPP) till June 2006, after which the federal government adopted commerce parity pricing (TPP). TPP is a benchmark that allocates 80% to import parity costs and 20% to export parity costs.
This pricing protects refinery margins, significantly these of impartial refineries that didn’t have the cushion of promoting margins for gasoline and diesel, whose pricing was deregulated by the federal government in 2010 and 2014, respectively.
Regardless of being freed from cost, petrol and diesel costs don’t precisely match prices and have been frozen since April 2022, leaving OMCs to soak up losses when oil costs rise and make big earnings when rates of interest fall.
The RTP low cost comes within the wake of rising under-recovery or losses in petrol and diesel, officers mentioned, including that not like cooking fuel LPG, the federal government is not going to compensate OMCs for losses in auto gasoline.
“With international oil costs growing by as much as 100 per cent up to now one month, PSU OMCs are dealing with a restoration shortfall of ₹24.40 per liter of petrol and ₹104.99 per liter of diesel on the Retail Promoting Worth (RSP) stage as on April 1, 2026,” the Ministry of Petroleum and Pure Gasoline mentioned in a submit on X on April 1. Whereas OMCs consider the RTP freeze will successfully unfold the monetary burden throughout the refining ecosystem, analysts say it may disproportionately affect impartial refiners with restricted downstream advertising publicity.
It will additionally distort market worth commitments to impartial and personal refiners, the official added.
issued – April 6, 2026 12:36am IST
