Govt not in talks with OMCs for fuel price cut, says Hardeep Singh Puri

Amid rumours of a cut in fuel prices ahead of the Lok Sabha elections, Petroleum Minister Hardeep Singh Puri said the government is not in talks with oil marketing companies for a reduction in petrol and diesel prices right now. 

Recently, media reports said the government is planning a significant cut in petrol and diesel prices ahead of the Lok Sabha elections, which are scheduled for April and May. Some of the reports said the price cut could be in the range of Rs 4-6 per litre, while some said the cut could be as high as Rs 10 per litre. 

However, the minister dismissed the reports as speculative and misleading. “All these media reports were not only speculative, but I would also turn around and say slightly mischievous. There have been no discussions with OMCs,” Puri told reporters today. 

The minister noted that the energy sector is going through a highly turbulent situation with volatility in crude oil prices, and the primary responsibility is to ensure availability and accessibility. 

“We are in a highly turbulent situation. There are two areas on the global map which are conflict situations. We had challenges with shipping in one particular area from where 12% of shipping traffic happens. 4-8% of global LNG cargoes went through this area in 2023 and 8.2 million barrels of crude oil comes through this area per day,” Puri noted. 

As per the dynamic fuel pricing model, state-owned oil marketing companies are supposed to revise the fuel prices daily based on a 15-day rolling average of international benchmark prices. However, Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp, which together control around 90% of the retail outlets, have not revised the prices since April 2022.  

India is the world’s third-largest consumer of crude oil, and imports more than 85% of its crude oil requirements. So, the prices of petrol and diesel are linked to international benchmarks. The retail prices of the fuels also depend on factors such as exchange rate, shipping charges, inland freight, refinery margin, dealer commission, central taxes, and state value-added tax. 

The average price of the Indian basket of crude oil jumped 102 percent (from $43.34 to $87.55) between November 2020 and November 2022, while the retail prices of petrol and diesel increased only by 18.95 percent and 26.5 percent during this period, the oil ministry said recently.  

The central government cut the central excise duty on petrol and diesel twice, in November 2021 and May 2022, which resulted in a cumulative reduction of Rs 13 and Rs 16 per litre on petrol and diesel, respectively. 

Currently, petrol and diesel are retailed in Delhi at Rs 96.72 and Rs 89.62, respectively.