Nayara Energy Raises Petrol and Diesel Prices in India

Key Highlights

• Nayara Energy, India's largest private fuel retailer, has raised petrol prices by Rs 5 per litre and diesel by Rs 3 a litre.
• The price hike is a result of the recent surge in global oil prices following the war in the Middle East.
• Nayara Energy, which operates 6,967 of India's 102,075 petrol pumps, has decided to pass on part of the increase in input costs to consumers.

Fuel Marketing Companies Under Strain

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Fuel marketing companies in India have been under strain as retail petrol and diesel prices remained frozen despite a nearly 50% surge in international oil prices since February 28. The freeze has resulted in mounting losses for private fuel retailers, who have received no government compensation to offset losses.

Comparison with State-Owned Fuel Retailers

State-owned fuel retailers, who control about 90% of the market, continue to keep rates on freeze. Private fuel retailers, on the other hand, have raised prices to pass on the increase in input costs to consumers. The effective rate increase differs from state to state depending on the incidence of local taxes like VAT.

Impact on Consumers

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The hike in petrol prices will have a significant impact on consumers, with the increase in price ranging from Rs 5.00 per litre to Rs 5.30 per litre for petrol, depending on the state. The price of normal petrol and diesel remains unchanged, while the price of premium petrol has been increased by Rs 2 per litre.

International Oil Prices

International oil prices touched USD 119 per barrel earlier this month on intensifying Iran war, before pulling back to around USD 100 a barrel. The government has maintained that petrol and diesel are deregulated commodities whose pricing is independently decided by oil marketing companies.

Profitability of Oil Companies

Oil companies have posted record profits in recent years, with Rs 81,000-crore profit in FY24 and Rs 23,743 crore profit in the December quarter alone. This has helped make up for past losses in margins.