Staterun oil marketing companies IOC, BPCL and HPCL are building a buffer to cushion uncertainty on pricing freedom of retail fuel in the run-up to the general elections.
This is evident from the record gross marketing margins — the difference between retail selling prices and refinery transfer prices after deducting dealer commission and taxes — on petrol and diesel hitting Rs 8.2 by end-December 2018, Kotak Institutional Equities said.
Typically, gross marketing margins are in the range of Rs 1.5-2.5 on the normalised level and marketing divisions of OMC’s account for 60-70 per cent of total operating profit.
Interestingly, OMCs have removed refinery transfer price from price build-up of petrol and diesel, disabling them from determining the gross marketing margins on a regular basis. Read More