Puri on oil prices: Union Minister for Petroleum and Natural Gas Hardeep Singh Puri on Sunday made a special request to the oil companies to reduce their prices in India. The latest remarks from Puri came in Varanasi while addressing a press conference, where he lauded the efforts of the oil companies as they did not alter the prices for the past 15 months.
Notably, he was talking about Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL). He claimed that the companies have not changed the prices of petrol and diesel, despite occurring huge losses. However, he urged the companies to bring down the prices for Indian consumers, amid the fact that the losses incurred are being recovered.
“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,” said the Petroleum Minister.
Oil companies acted as responsible corporate citizens
According to Puri, oil companies acted as responsible corporate citizens by not burdening consumers with the rally in global energy prices in aftermath of Russia’s invasion of Ukraine. “We didn’t ask them to hold prices. They did it on their own,” he said. That freeze had led to record high losses of Rs 17.4 per litre on petrol and Rs 27.7 a litre diesel for the week ended June 24, 2022.
The three fuel retailers haven’t changed petrol and diesel prices since April 6, 2022, despite input crude oil prices rising from USD 102.97 per barrel that month to USD 116.01 per barrel in June and falling to USD 82 per barrel this month.
Holding prices when input cost was higher than retail selling prices led to the three firms posting net earnings loss. They posted a combined net loss of Rs 21,201.18 crore during April-September despite accounting for Rs 22,000 crore announced but not paid LPG subsidy. Puri said the six-month loss numbers are known and they have to be recovered.
Turbulence in oil prices
International oil prices have been turbulent in the last couple of years. It dipped into the negative zone at the start of the pandemic in 2020 and swung wildly in 2022 — climbing to a 14-year high of nearly USD 140 per barrel in March 2022 after Russia invaded Ukraine, before sliding on weaker demand from top importer China and worries of an economic contraction.
But for a nation that is 85 per cent dependent on imports, the spike meant adding to already firming inflation and derailing the economic recovery from the pandemic.
So, the three fuel retailers, who control roughly 90 per cent of the market, froze petrol and diesel prices for the longest duration in at least two decades. They stopped daily price revision in early November 2021 when rates across the country hit an all-time high, prompting the government to roll back a part of the excise duty hike it had effected during the pandemic to take advantage of low oil prices.
The freeze continued into 2022 but the war-led spike in international oil prices prompted a Rs 10 a litre hike in petrol and diesel prices from mid-March before another round of excise duty cut rolled back all of the Rs 13 a litre and Rs 16 per litre increase in taxes on petrol and diesel effected during the pandemic.
That followed the current price freeze that began on April 6 and still continues. The oil ministry is pushing for compensation for the three retailers to make up for the losses they incurred.
(With inputs from agencies)