The government announced that retail prices of petrol and diesel will remain unchanged despite an excise reduction not being passed on to consumers. Instead, the reduction aims to alleviate under-recoveries incurred by public sector oil marketing companies like Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation. These companies have been selling fuel below cost to Indian consumers, with current under-recoveries standing at around Rs 26 per litre for petrol and Rs 81.90 per litre for diesel.
The daily combined under-recovery absorbed by these companies totals approximately Rs 2,400 crore, with the excise reduction offsetting Rs 10 per litre of these losses. This move ensures that oil marketing companies can sustain fuel supply without disruptions while keeping retail prices stable. The government has immediately reduced excise duty by Rs 10 per litre on both petrol and diesel in response to the significant surge in international crude oil prices.
The recent spike in crude oil prices, escalating from around $70 to about $122 per barrel in less than four weeks due to conflicts in West Asia, prompted this decision. While fuel prices have soared globally, India has maintained its prices, incurring a fiscal burden that the government is willing to bear to protect its citizens. Minister for Petroleum and Natural Gas, Hardeep Singh Puri, highlighted that the government is sacrificing tax revenues to ease the financial strain on oil marketing companies during this period of high international prices.
In addition to the excise reduction, the government has introduced an export levy on diesel to discourage exports and prioritize meeting domestic demand amidst surging international diesel prices. The focus remains on ensuring a stable fuel supply for Indian consumers, even at the expense of lucrative export opportunities in the current global market scenario. The government pledges to closely monitor global energy trends and take necessary actions to uphold supply stability and price protection for Indian consumers.
