Nayara Energy hikes petrol price by ₹5, diesel by ₹3
What's the story
India's leading private fuel retailer, Nayara Energy, has announced a hike in the prices of petrol and diesel. The company has raised the price of petrol by ₹5 per liter and that of diesel by ₹3 per liter across its 7,108 fuel stations in India. The new rates came into effect from Saturday morning. The decision comes amid rising international crude oil and refined-product prices that have been squeezing margins for companies like Nayara.
Market response
Nayara was 1st to pass on Iran conflict's energy impact
Nayara was the first fuel retailer to pass on the rise in international oil prices to consumers when the Iran conflict disrupted energy supplies earlier this year.
On March 26, it had raised petrol and diesel prices by ₹5 and ₹3 per liter, respectively.
However, state-owned fuel retailers followed suit in May with a series of staggered price hikes.
The latest increase is an attempt by Nayara to bridge the gap between retail prices and rising international oil costs.
Price fluctuations
Nayara reversed March price hike in July
Notably, Nayara had reversed its March price hike on July 1 after international crude prices eased. This was the first reduction by a fuel retailer in over two years.
The latest hike comes as state-owned oil marketing companies (OMCs) control over 90% of India's petrol pumps and have historically kept pump prices stable despite international crude price fluctuations.
Regulatory measures
Government intervenes after Nayara, Jio-bp restrict fuel sales
On October 1, the government directed private retailers not to cap petrol and diesel sales at their outlets.
This came after Nayara and Jio-bp had restricted volumes at some pumps amid retail sales losses.
The pricing gap between retail and bulk diesel prices has led industrial consumers to buy cheaper fuel from retail outlets, putting pressure on supplies.
Financial impact
OMCs losing ₹530 crore a day
Rating agency Icra had estimated last month that oil marketing companies were incurring negative marketing margins of ₹8 per liter on petrol and ₹9 per liter on diesel in September.
The agency had said OMCs were losing about ₹530 crore a day across petrol, diesel, and LPG due to higher crude prices and unchanged domestic fuel rates, affecting their profitability and cash flows.