Net marketing margin on petrol and diesel turns negative

Net marketing margin on petrol and diesel has turned negative after soaring to a record in early May as oil marketing companies have frozen domestic fuel rates while international rates and taxes have sharply increased.

Net marketing margin is currently at minus Rs 1.56 per litre, down from Rs 16.1 per litre during May 1 to 5, according to ICICI Securities. The margin sharply contracted after the government hiked excise duty on petrol and diesel by Rs 10 and Rs 13 per litre, respectively, on May 6. For the period between May 6 and 15, the margin averaged Rs 3.9 per litre on the two fuels. Increase in taxes didn’t translate into any change in retail prices then as oil companies absorbed the full hike.

In the second fortnight of May, the margins slipped further to Rs 1.84 per litre as international prices started rising while domestic prices remained frozen. International rates of petrol and diesel have risen by 35 per cent and 48 per cent, respectively, in a month. On June 1, the margin on domestic fuels slipped into negative.

ET Energy world
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