Petrol, diesel price hikes inevitable if oil costs mount, say former HPCL and BPCL executives – CNBC TV18

India may not be able to shield consumers from rising fuel costs indefinitely as elevated crude prices, rupee weakness and mounting under-recoveries increasingly strain oil marketing companies, according to former energy sector executives.

MK Surana, Former CMD of Hindustan Petroleum Corporation (HPCL), said the longer the current situation persists, the harder it will become for the government and oil companies to absorb losses without eventually passing on costs to consumers. “There will be a limit to which it can be absorbed, and there will be a situation where it will be inevitable to take the price hikes,” he said.

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That warning comes as global crude prices remain volatile amid geopolitical tensions and as India continues to hold retail fuel prices largely steady despite rising import costs.

Highlighting the pressure building within the system, Surana said oil companies are now facing a double blow from both crude prices and currency depreciation. “Every rupee increase in the exchange rate to dollar almost has the same impact as every dollar increase in the price of crude,” he said, warning that prolonged under-recoveries could eventually create liquidity stress for oil marketing companies.

Raj Kumar Dubey, Senior Energy Sector Leader and Former Director (Human Resources) at Bharat Petroleum Corporation

(BPCL), said the burden of elevated energy costs will ultimately have to show up somewhere — either in retail fuel prices, oil company balance sheets or government finances. “We cannot keep mitigating costs for a longer term,” he said.

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Dubey also linked Prime Minister Narendra Modi’s recent appeal to reduce non-essential fuel consumption with a broader push towards demand management and energy transition. Explaining the significance of transparent pricing, he said higher prices naturally encourage consumers to shift towards alternative forms of energy over time.

While several countries have already implemented fuel price hikes ranging from 20% to 50%, Dubey believes India may adopt a different approach depending on fiscal conditions and the duration of the crisis.

Surana added that although large refinery and petrochemical projects are unlikely to be abandoned midway, oil companies could recalibrate or defer non-essential capital expenditure if financial pressures intensify. Dividend payouts may also come under review as companies attempt to preserve liquidity.

He also stated that a lasting ceasefire between Russia and Ukraine could help ease global energy market uncertainty by reducing freight, insurance and risk premiums that currently inflate oil costs.

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