Petrol, diesel price reduction only when crude oil rates stabilise at lower levels, hints Puri
Puri says refiners, who turn crude oil into fuels like petrol and diesel, are currently processing crude bought two or two and a half months back
There are no signs of immediate reduction in the price of petrol and diesel, with the government today saying the current global crude oil cost slump would need to be watched into the future for any call to be taken on domestic pricing.
Responding to questions on whether the recent hikes in petrol and diesel prices in India would be reversed in the light of falling international crude costs, Petroleum and Natural Gas Minister Hardeep Singh Puri signalled that it was “not something under consideration in the immediate future”.
He said the current stocks with the public sector oil marketing companies and private firms were the ones bought at higher prices when the West Asia crisis was at its peak, and that the future prices would depend on current price stabilisation.
The minister said state-owned firms Indian Oil, Bharat Petroleum and Hindustan Petroleum had suffered cumulative losses of Rs 74,781 crore on the sale of petrol, diesel and subsidised cooking gas (LPG) on account of the West Asia conflict, which crippled global supply chains by blocking the Strait of Hormuz, the key energy pathway for the world.
The losses were on account of the sale of petrol and diesel below market rate for four months following the outbreak of the conflict on February 28, and unrecovered LPG subsidies for the same period and previous months, he said. The cumulative under-recoveries by OMCs as of today stood at Rs 2.1 lakh crore, said Puri.
He said despite the hit taken by the OMCs and the government, the prices of petrol and diesel in India had risen by only 5 per cent as against over 20 per cent in the developed world and over 35 per cent in the neighbourhood.
“In four years, the petrol price in Delhi rose from Rs 96 to Rs 102 a litre. The reason is the Centre took a hit of Rs 1 lakh crore after reducing excise duty by Rs 10 per litre on petrol and Rs 10 a litre on diesel. Our OMCs absorbed the hit,” Puri said.
On the question of petrol and diesel price cuts, the minister said, “We will see where the prices go in the future and will decide accordingly. It will not be appropriate for me to say anything today. The crude oil currently processed by the OMCs (as petrol and diesel) was bought at higher prices about two months ago.”
Global oil prices started declining over the past few weeks after the US and Iran signed an interim peace deal, easing tensions around the Strait of Hormuz from where one-fifth of the global crude supply passes. Crude oil prices are down from USD 119 per barrel at the peak of the West Asia war to USD 70 now.
Puri said the government would work to boost the current 74-day strategic reserve period. He said domestic refining capacity had been significantly enhanced and cited the soon-to-be-inaugurated Hindustan Petroleum refinery at Barmer’s Pachpadra (Rajasthan). It’s the country’s first standalone greenfield refinery-cum-petrochemical complex in nearly a decade, built as a single unified project with 9 MMTPA (million metric tonnes per annum) refining and 2.4 MMTPA petrochemical capacity.
