State oil giants shield India through crisis after crisis

India’s state-run oil companies have once again proved their strategic importance, keeping fuel supplies stable through crises ranging from floods and the Covid-19 pandemic to recent conflict in West Asia.

   Despite repeated privatisation attempts, public sector oil marketing companies — IOC, BPCL and HPCL — remain central to India’s energy security. Together, they control nearly 90% of the country’s fuel retail network and operate much of its refining and pipeline infrastructure. 

   During the latest West Asia conflict, as disruptions around the Strait of Hormuz raised supply concerns, state refiners swiftly diversified crude sourcing, increased LPG production and optimised refinery operations to prevent shortages across the country.  Their crisis response came at a significant financial cost. According to Crisil Ratings, IOC, BPCL and HPCL together incurred net under-recoveries of ₹40,000–45,000 crore between March and May, nearly matching their combined annual profits. Unlike private retailers, which passed on higher costs faster, state-run firms absorbed much of the price shock to shield consumers from steep fuel inflation. 

   The same pattern emerged during the pandemic, when public sector firms ensured uninterrupted fuel and LPG supplies even under strict lockdowns, while several private outlets struggled with supply disruptions. 

—PTI