Advertisement

Petroleum Minister hints at petrol and diesel price cuts soon

Post pandemic the prices of petrol and diesel in the country touched all-time highs. At the peak, the price of petrol was around Rs 105.41, and for diesel, it was Rs 96.67. Currently, the fuel pricing is also not a whole lot lesser but it’s still a little lower than it was at the peak. However, there is a piece of good news now, recently Minister of Petroleum and Natural Gas, Hardeep Singh Puri has hinted that in the near future, there could be a price cut on the fossil fuels in the country.

Petroleum Minister hints at petrol and diesel price cuts soon

Puri while speaking at an event he attended to flag off a CNG-driven boat race on the Ganges river stated, “Despite the international price rise, we could manage the oil prices because the Centre reduced excise duty on Nov 2021 and May 2022. Some state governments didn’t reduce the VAT despite this and there even now, the oil price is high. I request the oil companies that If the international oil prices are in control and under-recovery of their companies have stopped then reduce the oil prices in India also,”

The prices of petrol and diesel have not been updated by state-owned Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) in accordance with inflation for the previous 15 months. Now that oil prices have fallen, the losses suffered are being recovered stated the union minister while speaking at the event which was held in preparation for the India Energy Week taking place next month in Bengaluru.

The term under-recovery, as used by the petroleum minister, refers to the practise of selling fuel for less than its actual cost. According to reports, the OMCs lost Rs 21,200 crore by selling petrol and diesel below cost. OMCs are allowed to change product pricing in accordance with economic reasons, but political concerns are also taken into account.

Continuing his speech Puri also added, that the costs of gasoline and diesel have been kept in check, despite the fluctuating prices of the Indian crude basket. He stated, “One reason for keeping prices of petrol and diesel under check is the reduction in taxes. The central government revised the taxes twice between November 2021 and May 2022. Prices of petrol and diesel have not been revised since May 22, 2022, when the Finance Ministry cut Central Excise duty followed by a reduction in sales tax by many States.”

He Further stated, “However, during this period, on one hand, prices of brent crude have come down to USD 88 a barrel now from a high of USD 139 in March, on the other hand, India is increasing imports from Russia. Both of these have a combined impact on the overall fuel import bill, but losses are still there which seems to be the reason why oil marketing companies are not able to cut the prices.”

Meanwhile on the other hand a senior spokesman from an oil marketing company stated, “We are earning a gross profit on petrol and it is in single digit. However, during the last 15 days, due to cracks, petrol profitability has been affected. However, diesel sale is still on gross loss and it is in double-digit.”