New Delhi: As people have hardly ventured out of their homes during the 21-day lockdown in India, the country’s oil demand has drastically fallen by more than 70 per cent. Also Read - Petrol, Diesel Prices in Puducherry to be Costly From May 29 | Know Here Why
State-owned oil marketing companies (OMCs) including Indian Oil, BPCL, HPCL have seen significant erosion in the earnings for January-March quarter of FY20 even as low crude and product prices jacked up their margins on the sale of petrol and diesel. Also Read - COVID-19 Disruption May Push Centre to Further Hike Duty on Petrol, Diesel
According to a report by Bloomberg, this month’s average consumption could be less than 50 per cent of last year’s level, that is, if the central government decides to extend the lockdown beyond April 15. Also Read - 'Economically Anti-national': Congress Slams Centre For Increasing Fuel Price During Lockdown
A research report by ICICI Direct stated that the unusually high gross refining margins reported by OMCs have already seen a fall in the Q4 period and coupled with inventory losses that the companies would report during the period, would lead to a further drop in GRMs and consequently impact their revenues.
The projection is that BPCL may report a net loss of Rs 556.2 crore in Q4, while Indian Oil may report significantly higher losses at Rs 2376.3 crore. ICICI Direct has projected loss to the tune of Rs 628.4 crore for HPCL in January-March quarter of FY20.
“For Indian refiners, spreads of gas oil, gasoline and jet fuel are more important and have declined in the current quarter. The spread for gas oil declined by $1.9/bbl (per barrel) from $12.8/bbl to $10.9/bbl, which will negatively impact GRMs QoQ (quarter on quarter),” the report said.
In respect of products, the spreads for petrol declined by $8.7/bbl QoQ from $15.8/bbl to $6.8/bbl and for jet fuel by $6/bbl QoQ from $14.7/bbl to $8.7/bbl. This is a significant fall which together with inventory losses could put severe stress on OMCs financials.
Not just fuel consumption, but the lockdown situation has also resulted in declining sales in the City gas distribution segment (CGD) in the commercial sector. These restrictions are also likely to affect CNG and industrial/commercial PNG sales. However, domestic PNG sales volume will continue to report steady growth.
With IANS inputs