Finance Minister Arun Jaitley on Thursday defended petrol and diesel pricing policy of state-run firms, saying they had suffered an inventory loss of Rs. 30,000 crore this fiscal on falling international oil rates.
Rejecting Opposition charge that petrol and diesel prices have not been cut in line with the slump in international oil rates, he said some of the inventory loss has been adjusted by not reducing pump rates.
Mr Jaitley said this while intervening in the Rajya Sabha on the debate on Motion of Thanks on the President’s Address.
Refining and marketing companies report inventory losses when oil prices crash as they would buy crude oil at a particular price but by the time it is shipped to India, refined and turned into fuel, the rates would have gone down.
Since retail pump rates are linked to prevailing global prices, the oil firms book inventory losses.
Mr Jaitley said petrol price had been cut 11 times since August and diesel on 8 occasions on falling oil rates. After substantial cuts, the government used the opportunity to shore up its revenue by raising excise duty on the two fuels.
Petrol price has been cut by Rs. 16.29 a litre and diesel by Rs.12.35. The government mopped up over Rs. 20,000 crore by raising excise duty on petrol by Rs. 7.98 a litre and Rs. 6.70 per litre on diesel.
He said the government owns majority stake in such companies and there are shareholders and “some part of reduction in oil prices go to make up inventory losses.”
Blaming previous government for leaving a legacy in the highways sector in which neither any builder was willing to bid for any project nor any bank was ready to provide loan, Mr Jaitley said, “part of the money from reduction in oil prices will go to Highways building”.