Union Minister for Petroleum and Natural Gas, speaking in a press conference, talked about the central government’s efforts to insulate the country from the burden of energy price surge during the pandemic from June 2020 to June 2022, by following a ‘citizens first’ approach.
The minister highlighted how the government shielded consumers from bearing the brunt of inflation during Covid by raising domestic LPG prices by only 72 percent, even when oil marketing companies were suffering losses.
Despite challenges, public sector oil marketing companies ensured a continuous and reliable supply of essential cooking fuel across the country.
“When international prices increased by 303%, we opted to raise domestic prices by only 70%, absorbing the rest. During this period, prices even decreased by 4.56% in Delhi. Availability was not an issue. Crude oil must undergo refining in a refinery to produce petrol and diesel. The prices of petrol and diesel were reduced in November 2021 and May 2022,” Puri stated in the presser.
Under the leadership of Prime Minister Narendra Modi, the central government ensured a marginal price rise, resulting in an under-recovery of about Rs 28,000 crore for oil companies. Additionally, 14 crore free LPG gas refills were provided to consumers during the challenging COVID-19 period.
In October 2022, the central government further supported the sector by providing a one-time grant of Rs 22,000 crore to three Public Sector Undertaking Oil Marketing Companies (PSU OMCs): Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL).
Prime Minister Modi’s recent decision to reduce LPG prices by Rs 100 on International Women’s Day, coupled with a previous cut of Rs 200, aims to alleviate financial burdens for citizens.
The government also plans to continue the Rs 300 LPG subsidy for Ujjwala beneficiaries in the upcoming fiscal year.
As a result of these measures, the standard 14.2-kg domestic LPG cylinder now costs Rs 803 in Delhi, Rs 802.50 in Mumbai, Rs 829 in Kolkata, and Rs 818.50 in Chennai. For Ujjwala consumers, including the subsidy benefit, the effective LPG cylinder price is further reduced to Rs 503 in Delhi, Rs 502.50 in Mumbai, Rs 529 in Kolkata, and Rs 518.50 in Chennai.
The minister said India’s transparent policy of diversifying crude oil sources and increasing purchases from Russia, even during the Russia-Ukraine war, helped manage the supply chain effectively. Despite global challenges, the nation’s ‘nation-first’ policy and focus on consumers played a crucial role in successfully navigating through these global adversities.
Addressing the Red Sea crisis’s potential impact on global oil supply, the minister expressed confidence in India’s ability to manage the situation while prioritising availability, affordability, and the shift to green fuels.
“We know how the Russia-Ukraine war erupted. Russia produces 11-13 million barrels per day. One way was to stop buying crude oil from Russia, but it would have brought down the availability, and we couldn’t have disrupted oil supply to the public. In that case, the prices would have shot up to USD 138…there were talks of sanctions,” Puri said.
“At that stage, we were buying only 0.2 per cent crude oil from Russia. But, we had to confront and navigate the situation. We have been diversifying our supply and increasing our purchases from Russia. Our policy is that from wherever we will get the crude oil as per our requirements, we will buy it, and it is a transparent system. When other countries saw this, they also gave us discounts. Our policy is ‘nation first,’ and the consumer is paramount.”
The minister also discussed the stability of oil prices in India despite OPEC+ reducing crude oil production. Additionally, the government’s commitment to subsidising consumers was evident through the reduction in excise duty on petrol and diesel, resulting in a foregone revenue of about Rs 2.2 lakh crore.
Puri further highlighted the government’s decision to reduce excise duty on petrol and diesel by Rs 13 per litre and Rs 16 per litre, respectively, in two phases from November 2021 to May 2022.
Additionally, he mentioned that several BJP-ruled states have lowered VAT on fuel to further ease the burden on consumers.