Amid fears of crude oil prices rising in the international market due to geopolitical instability in West Asia, the country’s oil companies are facing the risk of financial loss. In order to handle this situation, the Central Government is unlikely to take any immediate steps. To provide relief to the public by reducing excise duty on petrol and diesel, the government would lose around ₹14,000 crore in revenue from the market every month. A senior official of the Central Petroleum Ministry shared this information on Monday.
According to information received from petroleum marketing business entities, the volatile situation in West Asia has kept oil imports under strategic pressure. Currently, India maintains its own strategic reserves (which account for 40% of demand), while the remaining 60% of the required oil and natural gas is fulfilled through imports from international markets.
Due to the closure of the ‘Hormuz Strait’, oil tankers have to take a longer route around Africa to bring oil. Amid this uncertainty, the supply chain of imported goods to India remains unaffected, and the government is keeping a close watch on the entire situation.
On the other hand, the Central Government has completely ruled out any possibility of reducing the Central Excise Duty on petrol and diesel by ₹10 per liter. Such a step by the government would heavily burden the exchequer and temporarily put the government in a tight spot, which is why the proposal has been dismissed. Following the decision not to reduce excise duty by the government, the pressure on domestic fuel prices and fuel marketing companies has increased.
Currently, state-run oil refining companies are facing losses. According to control market reports, these oil companies are incurring a daily loss of about ₹300 crore. These companies have appealed for high-level protection (from the central market). According to the current fuel policy, with the fear of rising prices, consumers in Maharashtra and Gujarat are facing a strong financial crisis due to the increase in fuel prices.
However, the government has clarified that the country currently has sufficient reserves for 78 days. Therefore, citizens have been advised not to panic about oil availability. Due to the increase in imports from international markets, instead of cutting taxes to lower fuel prices, the government faces a potential increase in its financial burden.
