Rs 2.2 trillion revenue foregone due to excise duty cuts on petrol, diesel: Hardeep Puri
Union minister for petroleum and natural gas, Hardeep Singh Puri, announced on Saturday that the government forewent approximately Rs 2.2 trillion in revenue due to cuts in excise duty on petrol and diesel from November 2021 to May 2022. Addressing a press conference, Puri discussed the measures taken by the Modi government to manage fuel prices amidst global crude oil price fluctuations. Excise duty on petrol and diesel saw a reduction of Rs 13 and Rs 16 per litre, respectively, during the mentioned period, resulting in the revenue loss. Puri responded to queries about potential future cuts, emphasizing that decisions would hinge on geopolitical stability and international oil prices. “The decision (to cut petrol and diesel prices) can be considered if the world situation and oil prices remain stable. However, unforeseen events, such as global conflicts, can impact these decisions,” Puri said, referencing incidents like the Houthi attacks in the Red Sea and the ongoing Russian-Ukraine war. Highlighting that 85% of India’s crude oil needs are met through imports, Puri detailed the impact of the Russia-Ukraine war on crude oil supply. Despite potential sanctions, India diversified its sources and increased purchases from Russia.
Saudi Aramco Reduces Heavy Crude Supply to Asia
Saudi oil giant Aramco is cutting supply of its heavier crudes to Asia in April, due to field maintenance, despite meeting full volume nominations for next month, multiple sources familiar with the plans told Reuters on Monday. Most buyers in China and India will receive the full contractual volumes they had asked for, although the supply slate of grades is being reshuffled to include fewer barrels of heavier crudes, according to the unnamed sources who have spoken to Reuters. At least one Chinese buyer asking for additional volumes of Arab Medium and Arab Heavy has been denied, while at least one Indian refiner saw full volumes met, but with reduced heavy crude volumes, the sources told Reuters. Last week, Saudi Arabia raised the official selling prices of its crude for Asian buyers for April following the extension of the OPEC+ production cut agreement until the end of the first half of 2024. The price for the country’s flagship Arab Light grade was raised by $0.20 per barrel over the Oman/Dubai average, meaning April deliveries will cost $1.70 per barrel more than the Oman/Dubai average, up from $1.50 per barrel this month. At the same time, Saudi Aramco lowered its prices for European buyers, by between $0.60 and $0.70 per barrel. Prices for sales to the United States were virtually unchanged. The price hike to Asia came despite expectations by some in the oil industry that the Saudis would leave the April prices unchanged from March. Early this month, OPEC+ agreed to extend its production cuts as benchmark prices remained stubbornly range-bound, largely on expectations of weak demand growth and additional supply from non-OPEC producers that could satisfy most of the new demands coming this year. The rollover of the cuts, including Saudi Arabia’s extension of its extra voluntary production reduction of 1 million barrels per day (bpd), was widely expected by the market and failed to make any impression on oil prices.
GAIL slashes prices of CNG across 20 cities
GAIL India on Saturday announced slashing of compressed natural gas prices by ₹2.50 a kg in 20 cities, including Bengaluru, Patna, Ranchi and the Taj Trapezium Zone, brightening prospects of petrol and diesel rates cut as state-run energy firms are reducing retail prices of fuels ahead of the 2024 general elections. A “substantial reduction” in the prices of CNG was made across India in areas under its operation, GAIL said on Saturday. The price cut ranged from 2.7% to 3.6% in 20 places including Varanasi, Jamshedpur, Bhubaneshwar, Cuttack, Dewas, Meerut, Sonepat, Dehradun, Puri and Adityapur. GAIL’s decision coincides with the move of three major state-run oil marketing companies (OMCs) — Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum – reducing cooking gas rates by ₹100 per cylinder for all 360 million customers, as announced by Prime Minister Narendra Modi on Friday. “The burden of the price cut will be largely borne by OMCs as government gives cooking gas subsidy to only 103 million Ujjwala beneficiaries,” an executive working for an OMC said, requesting anonymity. Ujjwala beneficiaries — 103 million poor households – get an additional subsidy of ₹300 per 14.2 kg cylinder. Earlier on Wednesday, Mahanagar Gas Ltd (MGL), and on Thursday, Indraprastha Gas Ltd (IGL), announced CNG rates cut of ₹2.50 per kg. While MGL serve the Mumbai region, IGL serves Delhi and the national capital region. Both firms are promoted by state-run entities. GAIL promotes MGL and IGL is promoted by GAIL and Bharat Petroleum. “Although announcements happened on different dates, the decisions to cut fuel rates were coordinated. The same could be possible for petrol and diesel in the coming days,” a second person with direct knowledge of fuel pricing by state-run entities said, declining to be named. The three oil marketers have posted about ₹70,000 net profit in first three quarters of current financial year, as against combined net profit of ₹11.3789 billion in the entirety of 2022-23, and are expected to make significant profits even in the three months to March as average international crude oil rates are more or less stable, he said. State-run OMCs have not changed pump prices of petrol and diesel for 23 months. IOC pumps of Delhi have kept prices of petrol at ₹96.72 per litre and diesel at ₹89.62.