Times Now | Reduce petrol and diesel prices: Petroleum Minister

Jan 23,2023

Hardeep Singh Puri, Petroleum and Natural Gas Minister has urged the oil marketing companies (OMCs) to reduce the retail prices of petrol and diesel if crude oil prices in the international market decreases and if OMC’s under recovery decreases. The Petroleum Minister made this statement during a function to flag off a CNG-driven boat race on the Ganges river, in preparation for the India Energy Week taking place next month in Bengaluru.

When the Petroleum Minister stated ‘under-recovery’ it refers to the practice of selling fuel below the cost price. It is being cited that the OMCs incurred a loss of Rs 21,200 crore due to selling petrol and diesel below cost. While OMCs are free to revise product prices based on economic factors, political considerations also play a role in the revision of prices.

The Petroleum Minister also mentioned that, despite volatile prices of the Indian crude basket, prices of petrol and diesel have been kept in check. He credited this to the reduction in taxes on petrol and diesel. The central government revised taxes twice between November 2021 and May 2022, and prices of petrol and diesel have not been revised since May 22, 2022 according to the minister.

However, despite the decrease in Brent crude prices from USD 139 in March to USD 88 per barrel now, and an increase in imports from Russia, the overall fuel import bill and losses for OMCs still exists, thus preventing them from decreasing prices. A senior representative from an OMC stated that while they are earning a single-digit gross profit on petrol, profitability has been affected in the last 15 days due to cracks in the market. On the other hand, diesel sales are still at a double-digit gross loss. The gross amount of loss or profit for the third quarter will be known once the OMCs release their results in the coming days.