The recent decision of the government to reduce petrol and diesel excise duties by ₹1.5, is credit negative for the three oil marketing companies (OMCs) — Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation, said Moody’s.
The government had also asked the OMCS to cut the retail price of both diesel and petrol by ₹1 per litre.
The OMCs cannot fully pass on higher crude oil prices to consumers and their earnings will be negatively affected, Moody’s added.
These three OMCs account for about 95% of the country’s retail fuel sales.
“We estimate the government’s decision will reduce the combined EBITDA of the three OMCs by ₹6,500 crore in fiscal 2019, which is around 9% of their total EBITDA of ₹69,200 crore in fiscal 2018,” Moody’s said in a statement.
OMCs to lose ₹3,500 cr.
CRISIL said that the fuel price cut would hit the OMCs by ₹Rs 3,500 crore in the third quarter.
“Oil marketing companies may be looking at a ₹3,500 crore blow to their operating profit this quarter,” the rating agency said in a report.
