Livemint | Union Minister Puri urges oil companies to slash prices in India if global prices are under control

Jan 22,2023

Hardeep Singh Puri, the Union Minister for Petroleum and Natural Gas said on Sunday urged the oil companies to reduce the oil prices in India too if international oil prices are under control and the companies have stopped incurring under-recoveries.

He said, “I request the oil companies that If the international oil prices are in control & 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 the state-owned Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) in 15 months. Now that oil prices have fallen, the losses incurred are being recovered.

He said at an event in Varanasi, "I will hope if under-recoveries (or losses) end, prices should come down."

According to Puri, oil companies behaved responsibly as corporate citizens by not passing along to consumers the spike in energy prices that followed Russia's invasion of Ukraine.

"We didn't ask them to hold prices. They did it on their own," he said.

For the week ending June 24, 2022, this freeze had resulted in record-breaking losses of ₹17.4 per litre on gasoline and ₹27.7 per litre on diesel.

Despite input crude oil prices increasing 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, the three fuel retailers haven't altered the prices of gasoline and diesel since April 6, 2022.

The three firms reported negative net earnings as a result of maintaining prices when input costs were higher than retail selling prices. Despite accounting for the ₹22,000 crore announced but unpaid LPG subsidy, they reported a combined net loss of ₹21,201.18 crore from April to September.

The six-month loss figures, according to Puri, are known and must be recovered.

The last few years have seen volatility in the price of oil on the global market. It dipped into the negative territory at the start of the pandemic in 2020 and fluctuated wildly in 2022, reaching a 14-year high of almost USD 140 per barrel in March 2022 after Russia invaded Ukraine, before falling on weaker demand from its top importer China and concerns about an economic slowdown.

Emphasising on central government's efforts to maintain the oil prices at affordable level, the minister said, “Despite the international price rise, we could manage the oil prices because the Centre reduced excise duty on Nov 2021 & May 2022. Some state govts didn’t reduce the VAT despite this & there even now, the oil price is high."

Earlier today during the event in Varanasi, Puri had said that India is the third-largest energy consumer in the world. He asserted that India stepping up domestic oil and gas exploration, diversifying its import base, converting to alternative energy sources, and using gas and green hydrogen as a path to energy security.