Oil Minister Dharmendra Pradhan on Monday said that there was no question of going back on deregulation of fuel pricing despite the government asking state-owned firms to subsidise petrol and diesel by Re 1 per litre.
Speaking at The Energy Forum here, he said international oil prices touching a four-year high of $85 per barrel is a “challenge” that has resulted in fuel prices continuing to rise despite a one-off excise duty cut and public sector units (PSUs) subsidising fuel.
Pradhan said he had spoken to Saudi Oil Minister Khalid A Al-Falih and “reminded him of the June commitment of Opec to increase production by 1 million barrels per day” to help cool prices.
“Maybe Opec is not following the June decision,” he said.
The combination of high international oil prices and a depreciating rupee has made imports costlier, resulting in retail pump rates shooting up. Petrol price on Monday was hiked by 21 paise a litre and diesel by 28 paise.
This propelled petrol price in Delhi to Rs 82.03 per litre and diesel to Rs 73.82.
Pradhan said the decision to cut excise duty on petrol and diesel by Rs 1.50 per litre each and ask oil PSUs to absorb another Re 1-a-litre was aimed at “giving relief to consumers”.
Later talking to reporters, he said the government was sensitive to consumers and had taken the decision in their interest.
On asking oil PSUs to subsidise fuel, he said the companies have taken the decision to “shield” consumers from high prices.
“This is not going back on deregulation. Fuel prices continue to be decided on a daily basis based on factors like benchmark international rate and foreign exchange rate,” he said.
The reduction in excise duty, only the second in four years of BJP-led NDA rule, will dent central government revenues by Rs 10,500 crore and was aimed at cooling retail prices that had shot up to an all-time high.
The BJP-government at the centre had raised excise duty on petrol by Rs 11.77 a litre and that on diesel by Rs 13.47 a litre in nine installments between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October last year by Rs 2 a litre.