Oil marketing companies such as Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) are free to set their fuel prices, said Oil and Gas Minister Hardeep Singh Puri. In the minister’s comments on Saturday, the centre announced that the excise duty on petrol would be raised to Rs 8 per litre and the excise duty on diesel would be raised to Rs 6 per litre.

“They (OMC) are very powerful stakeholders in our system. They make their own decisions,” Puri told CNBC-TV18 in an exclusive interview on the sidelines of the 2022 World Economic Forum annual meeting.

OMC fell on Monday after the government decided to cut fuel excise duty and provide a Rs 200 subsidy for gas cylinders. Harshvardhan Dole, VP of institutional equities at IIFL, said OMC had suffered huge inventory losses, adding that GST cuts would cost the company close to Rs 5,000 crore.

The excise tax cuts on petrol and diesel are a sequel to the cuts made in November, Puri added. He said PM Narendra Modi had decided to cut the excise duty on petrol and diesel based on the input he received from various stakeholders in the system. Samir Arora, founder and fund manager of Helios Capital, said that from a macro perspective, the GST cut would not change much.

“We’re only talking about May. Oil prices are up more than 5 per cent, which means if you effectively give back a 5 per cent price cut through GST or any tax cut, it just takes you back to April 30. Plus, we know the oil marketing companies are in a huge gap.

So, in theory, one reason for this could be to make sure that the oil companies get at least some small growth when in reality it’s not the government that gets the money, it’s the OMC that gets the money,” he said.