Daijiworld Media Network - New Delhi
New Delhi, Oct 4: Nayara Energy, India's largest private fuel retailer, has raised petrol prices by Rs 5 per litre and diesel prices by Rs 3 per litre with immediate effect, people familiar with the matter said.
The price hike took effect from the early hours of Saturday as the private fuel retailer sought to narrow the gap between retail prices and rising international crude oil and refined-product costs.
Nayara operates more than 7,000 fuel stations across the country and runs a 20-million-tonne-a-year refinery at Vadinar in Gujarat. An email seeking comments from the company remained unanswered.
The latest increase comes amid renewed pressure on fuel retailers from higher global energy prices and follows a series of price adjustments by Nayara this year as geopolitical disruptions have affected crude and petroleum-product markets.
Nayara was the first fuel retailer to pass on the surge in international oil prices to consumers when the Iran conflict disrupted energy supplies earlier this year. On March 26, it raised petrol prices by Rs 5 per litre and diesel by Rs 3, taking the rates at its outlets to Rs 100.71 and Rs 91.31 per litre, respectively.
State-owned oil marketing companies subsequently raised petrol and diesel prices in a series of staggered increases in May, with the cumulative hike reaching about Rs 7.50 per litre for both fuels by late May.
Nayara later reversed its March increase, cutting petrol prices by Rs 5 per litre and diesel by Rs 3 on July 1 after international crude prices eased as tensions in West Asia subsided. The reduction was the first by a fuel retailer in more than two years and brought its prices broadly in line with those of state-owned retailers.
State-owned Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation together control more than 90 per cent of the country's 1,04,137 fuel outlets and have historically kept retail prices relatively stable despite fluctuations in international crude prices.
The pricing gap has become increasingly significant for fuel retailers. On October 1, the government said private retailers should not restrict petrol and diesel sales at their outlets after Nayara and Jio-bp had limited volumes at some pumps amid losses on retail sales.
Officials said the difference between retail and bulk diesel prices had encouraged industrial consumers to buy cheaper fuel from retail outlets, putting pressure on supplies.
Jio-bp, the fuel retail joint venture between Reliance Industries and UK-based BP, operates 2,304 petrol pumps and has so far not revised petrol and diesel prices.
Rating agency Icra had estimated last month that oil marketing companies were incurring negative marketing margins of around Rs 8 per litre on petrol and Rs 9 per litre on diesel in September, as retail prices remained unchanged despite a sharp rise in crude and petroleum-product prices.
Icra said OMCs were losing about Rs 530 crore a day across petrol, diesel and LPG, with elevated crude prices and unchanged domestic fuel prices putting pressure on their profitability and cash flows.
The agency said the combined refining and marketing operations of OMCs break even when crude prices are in the range of USD 85-90 a barrel. Beyond that level, without corresponding increases in retail prices, marketing losses are likely to emerge.
The latest Nayara hike could widen the price differential between private and state-owned fuel outlets in the near term. If sustained, higher retail fuel prices could increase freight and operating costs and have implications for household inflation and fuel demand, while keeping pump prices below market-linked costs could increase losses for refiners and fuel retailers.