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Correspondent

21 August 2024 at 10:20:16 am

Crude Reality

Since the Iran crisis erupted five months ago and sent tremors through global energy markets, India’s motorists have been spared the full force of the oil shock. Despite a hike, petrol pumps have generally continued to display familiar prices even as crude surged, because state-owned oil companies quietly absorbed the damage. However, with losses now piling up at Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), it appears that the bill, which had been...

Crude Reality

Since the Iran crisis erupted five months ago and sent tremors through global energy markets, India’s motorists have been spared the full force of the oil shock. Despite a hike, petrol pumps have generally continued to display familiar prices even as crude surged, because state-owned oil companies quietly absorbed the damage. However, with losses now piling up at Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), it appears that the bill, which had been deferred all this while, cannot be avoided. Unless global crude prices retreat sharply, Indian consumers may soon feel the full force of the unabating West Asian crisis. HPCL plunged into a consolidated loss of Rs. 12,265 crore in the June quarter, while BPCL reported a loss of Rs. 3,962 crore - the first quarterly loss for the latter in 15 quarters. The crisis has exposed that India’s fuel-price stability remains heavily dependent on the financial health of state-run oil companies. When global markets turn hostile, these companies are expected to sacrifice margins, protect consumers and absorb geopolitical shocks. This model becomes increasingly fragile when crises become prolonged. Crude oil prices briefly approached $125 a barrel during the height of the West Asia conflict, rising more than 50 percent as fears grew over supply disruptions. Though petrol and diesel prices were eventually raised by more than Rs 7.50 per litre and domestic LPG prices by Rs. 89 per cylinder, the adjustments came too late and were insufficient. Government estimates suggest oil marketing companies have accumulated under-recoveries of around Rs. 75,000 crore during the Iran crisis. HPCL’s refining business in fact had delivered an impressive gross refining margin of $23.80 per barrel in the first quarter, compared with just $3.08 a year earlier. Yet those gains were wiped out by losses in fuel marketing. BPCL faced a similar squeeze. Higher revenues of Rs. 1.59 lakh crore during the quarter could not compensate for suppressed margins and LPG losses. This is the familiar political dilemma of fuel pricing. Governments fear the inflationary consequences of raising prices sharply, especially in an economy where transport costs influence everything from food prices to manufacturing expenses. But delaying adjustments merely shifts it from consumers to public-sector balance sheets. The consequences are already visible. HPCL reported LPG under-recoveries of Rs. 3,607 crore, while BPCL recorded losses of Rs. 3,485 crore on LPG sales. Both companies also face thousands of crores in unpaid subsidy dues. If global crude prices remain elevated, the pressure valve will eventually have to open. Either the government compensates oil companies through larger subsidies by squeezing public finances or consumers face higher fuel prices. India has long benefited from relatively stable domestic fuel prices despite global volatility. But energy markets do not respect political calendars.

A man with the mission

Updated: Nov 29, 2024

Rashtriya Swayamsevak Sangh

Mumbai: Most of the analysts including senior Mahayuti leaders have given credit to the Rashtriya Swayamsevak Sangh (RSS) for the support it lent to the ruling combine ahead of the recently concluded state assembly elections in Maharashtra. Though, collective leadership is the principle that RSS practices in everyday life, if any one person is to be given the credit of the efforts that would indeed be Atul Limaye, the Sah Sarakaryavah of the RSS.


Born in a lawyers’ family in Nashik and an engineer by education, Limaye left his corporate career to become RSS ‘pracharak’ in early ‘90s. After his initial years in Western Maharashtra and Raigad in Konkan region, he became Sah Prant Pracharak of Devgiri Prant (Marathwada and North Maharashtra regions) where he got a chance to closely study the agrarian economy and its socio-political aspects. When the BJP came to power in Maharashtra in 2014 he was in charge of the Western Maharashtra. His role was crucial in appointments of several of the heads of educational institutions and government institutions.


At the same time he also led a large team of highly trained and ideologically robust young men and women to form several study groups, research teams and think tanks to study a wide range of issues right from the demographic aggression of Muslims and Christians to policy making in the present government set up. These groups and institutions proved useful for the state government in handling Maratha agitation that began in 2017 and the Urban Naxal upheaval the next year.


As Sah Sarakaryavah, he was the key person who called shots behind the curtains during the present assembly polls in Maharashtra. He began by conducting a mega congregation of the individuals attached with the publicity arm of the RSS from all the areas of the state. He also ensured that the Shakha level Karyakarta of the RSS too is mobilized to be able to take on, what can be described as the biggest political challenge, that the Hindutva forces faced.

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