Auto-fuel prices may rise further by Rs
3/litre to support OMC marketing margins
The Centre’s tax (basic
excise, surcharge, agri-infra cess and road/infra cess) is currently Rs
31.83/litre for diesel and Rs 32.98/litre for petrol.
Retail prices of
auto-fuels may rise by another Rs 3/litre as state-run oil marketing companies
(OMCs) will likely want to improve their marketing margins amid rising global
crude and product prices, analysts feel.
The marketing
margin of Rs 1.56 per litre in the ongoing quarter till date is the lowest
encountered by OMCs in the last nine quarters and with recent snowstorms
impacting refinery operations in the US, the margin will fall further if retail
prices are unchanged.
On Friday, retail petrol price in
Delhi was at an all-time high of Rs 90.93/litre, rising by about 9% in the last
two months. “More hikes are needed to prevent margin from plunging in Mar’21
and being over Rs 2.5/litre from Apr’21,” ICICI Securities said in a recent note, adding that
“retail price hikes of Rs 2.9/litre is required for net margin to rise to over
Rs 2.5/litre at latest international prices”.
The price of
Indian basket of crude is currently at $63.79/barrel, up from $50/barrel in
mid-December, supported by global demand recovery and voluntary production cuts
from major oil exporting nations. “If crude rallies further and settles higher
and excise duties are not cut, we see pressure on marketing margins in FY22E
which along with higher interest expenses could hurt OMC earnings,” analysts at
Jefferies warned. However, the brokerage firm said that OMCs might get a relief
from rising global prices in the form of higher inventory gains, ranging
between $2 and $8 per barrel in 4QFY21.
(financial express)
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