Petrol and diesel rates will be reviewed every 15 days, the federal government said Friday after it slashed special additional excise duties on both petroleum products by Rs 10 per litre each.
The cuts will bring total central government excise duties on petrol down to Rs 11.9 per litre of petrol and Rs 7.8 per litre of diesel, effective immediately, the Petroleum Ministry had said.
However, the reduction will not affect retail prices, Vivek Chaturvedi, Chairman of the Central Board of Indirect Taxes and Customs, confirmed at a press briefing later in the day.
Chaturvedi confirmed the cut was meant to absorb oil marketing companies’ under-recoveries as a result of price shocks and supply disruptions emerging from the US and Israel’s war on Iran.
The war – which began Feb 28 with strikes on Tehran and has since expanded to the targeting of energy infrastructure across West Asia – also prompted Iran to mount a blockade over the Strait of Hormuz, through which 20-25 per cent of the world’s seaborne crude oil and gas transits.
The war and the blockade sent prices of global benchmark Brent crude skyrocketing from US$68 per barrel on Feb 28 (before the fighting began) to past the US$100 red line on March 7.
As of Friday afternoon (3.40 pm IST) Brent was at US$110 per barrel.
“There is a significant surge in international crude prices. There has been a surge for petrol, diesel, and ATF (i.e., aviation turbine fuel, a factor in commercial air fares),” he explained, “The government has a calibrated approach… special additional excise duty (i.e., windfall tax) and cess have been brought (to curb) export of diesel and ATF. Rates will be reviewed every 15 days.”
Meanwhile, Sujata Sharma, Joint Secretary (Marketing & Oil Refinery), Ministry of Petroleum and Natural Gas, stressed that India has “sufficient crude inventories” to assuage public concerns about the country running out of petrol, diesel, and other types of fuel, including LNG and LPG.
“We are still in a war situation. Our crude, LPG and LNG supplies have been affected (but) we have sufficient inventories and have lined up supplies for the next two months,” she said.
“The LPG and LNG situation is comfortable… refineries are working at more than 100% capacity and commercial supplies have been restored from over the past few weeks to 70 per cent.”
Sharma urged the public to disregard rumours about fuel shortages and not queue up outside petrol pumps. “The government had two options – either pass on pressure (from the Iran war) to consumers or absorb it. The government decided to absorb the pressure,” she stressed.
She also pointed out petrol and diesel retail prices had not increased since April 2022. “We would like to reiterate… we have enough supplies of crude, petrol, diesel, gas … don’t panic.”