Loss of margin should be full reversed by March end of current fiscal year, official added.State-owned fuel retailers have stopped absorbing a government-mandated cut of Rs 1 (0.014 US cents) a litre in their marketing margins on sale of petrol and diesel due to a steep fall in global oil prices, sources said.
In October, finance ministry had cut its production tax on two fuels by Rs 1.50 a litre and had asked state-owned fuel retailers to reduce their marketing margins by Rs 1 a litre to insulate consumers from a surge in global oil prices at time.But oil prices have slumped in recent weeks allowing marketing margin to be restored to its former levels, said a source privy to matter.In October, companies were told to gradually recover reduction in margins if crude prices fell, two finance ministry officials said."Now that oil prices have come down they are now able to compensate losses," one of officials said.It means that state-owned oil refiners, who are also its main fuel retailers, will not be passing on all benefits of drop in crude prices to consumers as they seek to recoup margin hit they have been taking.This is reflected, at least in part, by relative difference in recent declines of fuel prices in country and global benchmarks.
The price of Brent crude, Singapore gasoline and Arab Gulf Diesel have declined between 37-40 per cent since October 1 while petrol and diesel prices in country have been reduced by about 17-18 percent, according to Reuters calculations.That loss of margin should be full reversed by March end of current fiscal year, official added.The sources declined to be named because of sensitivity of subject.The state-owned retailers - Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp - control most of fuel retail business in India.The three companies did not immediately respond to Reuters' requests for comment.Domestic petrol and diesel prices are linked to Singapore gasoline prices and Arab Gulf diesel prices, which mostly track movements in crude oil prices.