Rs 2.2 lakh crore revenue foregone due to excise duty cuts on petrol, diesel: Hardeep Puri

NEW DELHI: Around Rs 2.2 lakh crore of revenue was foregone because of cuts in excise duty on petrol and diesel announced between November 2021 and May 2022, Union Minister Hardeep Singh Puri.

Addressing a press conference on Saturday, Union Minister for Petroleum and Natural Gas Hardeep Puri talked about the steps taken by the Modi government to reduce and maintain fuel prices despite fluctuations in global crude oil prices. “Excise duty on petrol and diesel was cut by Rs 13 a litre and Rs 16, respectively, between November 2021 and May 2022. Revenue foregone as a result of the cuts was Rs 2.2 lakh crore”, he said.

#WATCH | Delhi: At his press conference, Union Minister Hardeep Singh Puri says, "Earlier, the companies had incurred a loss of Rs 28000 cr to maintain the price of gas. Out of that, the government has returned Rs 22,000 crores. To bring down the price of petrol and diesel by Rs… pic.twitter.com/XN1R13rVd9

— ANI (@ANI) March 9, 2024

Responding to a question on the likelihood of a cut in petrol and diesel prices, the minister said that the decision to reduce retail fuel prices would depend on the stabilization of the geopolitical scenario and international oil prices. “I will only say that if the situation of the world is stable, oil prices stable, then it (price cut on petrol and diesel) can be looked at”.

“But if you say an attack is taking place somewhere in the world and insurance and freight price go up…” he said, as he referred to the Houthi attacks in the Red Sea and the Russian-Ukraine war. The Union Minister said 85 per cent of India’s crude oil requirements are met by imports, with the price of crude in the international market being the benchmark.

The Union Minister elaborated on how the ‘Russia-Ukraine war’ impacted the crude oil supply, but India was able to manage its supply by diversifying its sources and increasing the purchase from Russia despite fear of sanctions.

“We know how the Russia-Ukraine war erupted. Russia produces 11-13 million barrels per day. One way was to stop buying crude oil from Russia, but it would have brought down the availability and we couldn’t have disrupted oil supply for the public. In that case, the prices would have shot up to USD 138…there was talk of sanctions”, Puri said.

“At that stage, we were buying only 0.2 per cent crude oil from Russia. But, we had to confront and navigate the situation. We have been diversifying our supply and increasing our purchases from Russia. Our policy is that from wherever we will get the crude oil as per our requirements, we will buy it, and it is a totally transparent system. When other countries saw this, they also gave us discounts. Our policy is ‘nation first’ and the consumer is paramount”.

India did not put the burden of rising energy prices on its citizens when global prices of LPG skyrocketed, and instead followed a citizens-first approach, the minister said.

During the Covid period from June 2020 to June 2022, the international prices of LPG increased by around 300 per cent, according to government data. However, to insulate consumers from fluctuations in international LPG prices, the cost increase was not fully passed on to consumers of domestic LPG. Accordingly, domestic LPG prices were raised by only 72 per cent during this period, leading to significant losses for the oil marketing companies.

Despite these losses, the public sector oil marketing companies have ensured continuous supplies of this essential cooking fuel across the country.

Prime Minister Narendra Modi announced a Rs 100 reduction in LPG prices on Friday, which was International Women’s Day. This reduction in gas prices is over the Rs 200 cut announced during Raksha Bandhan last year. The government has also decided to continue the Rs 300 LPG subsidy for Ujjwala beneficiaries for the next fiscal.

With the government moves, the standard 14.2-kg domestic LPG cylinder would now cost Rs 803 in Delhi, Rs 802.50 in Mumbai, Rs 829 in Kolkata, and Rs 818.50 in Chennai. The effective LPG cylinder price for Ujjwala consumers — including the subsidy benefit — would be Rs 503 in Delhi, Rs 502.50 in Mumbai, Rs 529 in Kolkata and Rs 518.50 in Chennai. (ANI)