The government stated that these companies have been supplying fuel at prices significantly below their cost due to the sharp rise in global crude oil prices
Pic/PTI
The Centre on Friday clarified that retail prices of petrol and diesel will remain unchanged despite the recent excise duty cut, as the reduction is intended to offset losses incurred by public sector oil marketing companies rather than provide direct relief at fuel stations, reported news agency IANS.
According to the Ministry of Petroleum, the excise duty cut of Rs 10 per litre on both petrol and diesel is being used to reduce the financial burden on state-run fuel retailers, including Indian Oil Corporation, Bharat Petroleum Corporation Limited, and Hindustan Petroleum Corporation Limited, reported IANS.
Oil Firms Facing Massive Under-Recoveries
The government stated that these companies have been supplying fuel at prices significantly below their cost due to the sharp rise in global crude oil prices. Current estimates indicate under-recoveries of approximately Rs 26 per litre on petrol and as high as Rs 81.90 per litre on diesel, reported IANS.
Combined daily losses for oil marketing companies are estimated at around Rs 2,400 crore. The excise reduction helps offset about Rs 10 per litre of these losses, enabling companies to continue uninterrupted supply without increasing retail prices.
Global Price Surge Drives Policy Decision
The move comes amid a steep rise in international crude oil prices, which have surged from about USD 70 per barrel to nearly USD 122 per barrel in the past month. The increase has been driven by geopolitical tensions and disruptions in global supply chains, particularly due to the ongoing conflict in West Asia.
The government highlighted that fuel prices have risen sharply across global markets, with increases ranging between 20 and 50 per cent in various regions including Asia, North America, and Europe. In contrast, India has maintained stable retail prices, absorbing the fiscal impact.
Government Prioritises Consumer Protection
Union Petroleum and Natural Gas Minister Hardeep Singh Puri said the decision reflects the government’s commitment to shielding citizens from global price volatility.
He noted that under the leadership of Prime Minister Narendra Modi, the government has chosen to absorb a significant hit to its tax revenues in order to support oil companies and maintain price stability for consumers.
Export Levy Introduced to Ensure Domestic Supply
Alongside the excise duty cut, the government has imposed an export levy on diesel to discourage excessive exports at a time of high international prices. The measure is aimed at ensuring that domestic demand is prioritised and fuel availability remains stable across the country.
Officials emphasised that maintaining adequate fuel supply within India takes precedence over export opportunities, even as global markets offer higher returns, reported IANS.
Government to Monitor Evolving Energy Situation
The Centre reiterated that it will continue to closely monitor global energy developments and take necessary steps to ensure supply stability and price protection for Indian consumers, reported IANS.
With international markets remaining volatile, the government’s approach signals a balancing act between supporting public sector oil companies and protecting consumers from sudden price hikes.
(With inputs from IANS)
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