INDUSTRY
Refiners to absorb rising oil prices, as OMCs fix discounted rates for petroleum products
- IBJ Bureau
- Apr 06, 2026
State-run oil marketing companies (OMCs) will pay refineries a discounted price for petrol, diesel, aviation turbine fuel (ATF) and kerosene. The discount, the first since fuel price deregulation, is designed to limit OMCs’ mounting losses from their self-imposed freeze on retail fuel prices.
The OMCs have fixed rates for petroleum products that are at a discount of up to Rs 60 per litre to their imported cost. The discounted rates, which are applicable with effect from March 16, will hit standalone refiners, such as MRPL, CPCL and HMEL the most.
International oil prices have risen from about $70 per barrel before the West Asia conflict to over $100, but retail petrol and diesel prices in India have remained unchanged, forcing OMCs to absorb the impact.
With no immediate end to the conflict in sight, OMCs have decided to fix a discount on the refinery transfer price (RTP) – the internal price at which refineries sell fuel to marketing arms – to pay refineries effectively less than the import-parity cost of the fuels such as petrol and diesel.
For the second half of March, a discount of Rs 22,342 per kilolitre (kl) – Rs 22.34 per litre – was fixed on diesel to bring down the RTP of Rs 85,349 per kl to Rs 63,007 per kl.
For the first fortnight of April, the discount on diesel has been fixed at Rs 60,239 per kl to lower RTP from Rs 1,46,243 per kl to Rs 86,004 per kl.
On the ATF, the RTP has been slashed to Rs 76,923 per kl from Rs 1,27,486 per kl after considering a discount of Rs 50,564 per kl.
The RTP for kerosene after a discount of Rs 46,311 per kl has been fixed at Rs 77,534 per kl from Rs 1,23,845 per kl.
The discounted pricing will prevent refiners from fully passing on higher crude oil costs to OMCs through the RTP, forcing the refiners to absorb a part of the impact of elevated global oil prices.
Integrated State-run companies, such as Indian Oil Corporation (IOCL), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL), can offset a part of the hit between refining and marketing operations.
But standalone refiners that rely on market-linked RTP for revenue may face a sharper squeeze on their margins.
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