- State fuel retailers lose about Rs 20/litre on petrol and Rs 100/litre on diesel due to frozen prices
- No government plan exists to raise petrol or diesel prices after upcoming assembly elections
- International crude oil prices surged from $70 to over $113 per barrel since last year
State-owned fuel retailers are incurring losses of about Rs 20 per litre on petrol and roughly Rs 100 per litre on diesel as pump prices remain frozen for nearly four years despite a surge in global oil prices, the government said on Thursday, signalling there is no immediate plan to raise retail fuel rates.
Dismissing reports of a potential Rs 25-28 per litre increase in petrol and diesel prices after assembly elections, the Ministry of Petroleum and Natural Gas (MoPNG) said in a post on X that "there is no such proposal under consideration by the government".
At a news briefing on developments in West Asia, Sujata Sharma, Joint Secretary in MoPNG, said international prices of crude oil (raw material used to make fuel like petrol and diesel) and LPG rates have been very volatile, yet the government has not increased prices.
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Crude which was USD 70 per barrel last year, averaged over USD 113 this month, she said. "There is a huge increase... inspite of that the government has not increased prices and the effort of the government has been to keep the prices stable." Retail petrol and diesel prices have remained frozen since early April 2022 -- a period during which oil prices rose in some months and fell in other times. When prices fell, state-owned oil firms made handsome profits, which they used to set off losses when rates rose.
Sharma said despite the increase in oil prices after war in West Asia, the government has not increased retail pump rates. "The effort of the government has been to keep the price stable." The sharp increase in prices in international markets, on which India is 88 per cent dependent to meet its oil needs, has led to PSUs incurring under-recoveries on petrol and diesel, she said.
Under-recoveries -- the difference between retail price and the desired rate if domestic prices were aligned with import parity -- vary on daily basis.
"(Under-recovery) may be around Rs 20 (per litre) on petrol and around Rs 100 (a litre) on diesel," she said.
She, however, hastened to add that government interventions so far have been to provide stability in terms of price and it will continue to do that.
The government last month cut tax on petrol and diesel by Rs 10 a litre each so as to ensure that "the burden of high oil prices are not transferred to consumers," she said.
Alongside, the government also imposed a tax on fuel export so as to "motivate" refiners to prioritise domestic sales, she said.
On cooking gas LPG, she said while the Saudi CP -- the benchmark for LPG pricing -- has increased 102 per cent between July 2023 and April 2026, rates in the country have fallen 17 per cent.
"Data is speaking for itself and the effort of the government is also visible," she added.
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The clarification came after a report by Kotak Institutional Equities hinted of a steep increase in petrol and diesel prices once the polling for assembly elections in states like West Bengal ends on April 29. Kotak projected a Rs 25-28 a litre increase in price based on crude oil staying close to USD 120 per barrel.
The ministry said such reports are "designed to create fear and panic amongst the citizens and are mischievous and misleading".
"In fact, India is the only country where petrol and diesel prices haven't increased in the last four years," it said. "Government of India and oil PSUs have taken relentless steps in order to insulate the Indian citizens from steep increases in international prices." International oil prices spiked after the US and Israel attacked Iran on February 28, and Tehran's sweeping retaliation that effectively shut the Strait of Hormuz -- one of the world's most critical energy arteries, linking the Persian Gulf to global markets and handling roughly a fifth of global oil trade along with significant volumes of liquefied natural gas.
After the Iran war, oil prices spiked from around USD 70 per barrel to USD 119 before seeing some correction. Renewed tensions have pushed Brent -- the world's most known crude oil benchmark -- to USD 103-106 per barrel.
Despite a more than 50 per cent rise in input crude oil prices, petrol and diesel rates have remained unchanged in India. Petrol is priced at Rs 94.77 a litre in the national capital and diesel comes for Rs 87.67.
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