Hyderabad
The recent cut in petrol and diesel prices by Rs 2.50 by the Centre is estimated to reduce the combined EBITDA margins of IOCL, HPCL and BPCL by Rs 6,500 crore during the current fiscal, rating agency Moody’s said on Monday.

It also said that on October 4, the government reduced petrol and diesel retail selling prices by Rs 2.50 per litre, through the lowering of excise duties by Rs 1.50 per litre and asking the country’s oil marketing companies to absorb the remaining Rs 1 per litre price cut.

“We estimate that the government’s decision will reduce the combined EBITDA of the three OMCs by INR 65 billion (Rs 6,500 crore) in fiscal 2019, which ends in March 2019, which is around 9 per cent of their total EBITDA of INR 692 billion .

“Despite the negative earnings effect of the government’s decision, we continue to expect the three OMCs to report higher EBITDA in fiscal 2019 versus fiscal 2018, given higher sales volume, stable refining margins and the depreciating Indian rupee,” the report said.
Retail selling prices of petrol and diesel have reached a record high in India because of the increase in global crude oil prices and depreciation in the Indian rupee.