Union minister Nitin Gadkari on Friday blamed the Russia-Ukraine conflict for the hike in fuel prices in India.
“In India, 80% of the oil is imported,” he said at ABP News’ “Ideas of India” summit. “Amid the ongoing war between Russia and Ukraine, the oil prices have spiralled up in international markets and we cannot do anything about that.”
The minister said that he has been pitching to make India self-reliant since 2004 and has called for developing indigenous energy generation capabilities.
Fuel prices have been increased four times by 80 paise per litre this week. The first increase of 80 paise a litre in fuel prices was done on Tuesday after a hiatus of 137 days. The price of liquified petroleum gas was also increased by Rs 50 per cylinder on the same day. The LPG rate was last revised on October 6.
Following this, fuel prices were hiked on Wednesday and Friday.
On Saturday, the prices of petrol and diesel were again hiked by 80 paise per litre, reported ANI. With this, the rates have been increased by Rs 3.20 per litre in five days.
Public sector oil marketing companies make the change in fuel rates based on international crude oil prices, exchange rate, tax structure, inland freight and other elements that affect the cost. Higher costs are detrimental to India as it imports 85% of its crude oil.
The recent hike in fuel prices were first seen about a month after Russia began its invasion of Ukraine on February 24. At that time, international oil prices had crossed the $100 per barrel mark for the first time in seven years.
On Friday, the price of Brent crude stood at $120.65 (or Rs 9,202.73), according to Bloomberg. Brent is a global price benchmark for crude oils from the Atlantic basin.
The Opposition has, however, claimed that attributing the hike in fuel prices to the war in Europe was not justified. Congress’ Deputy leader in Lok Sabha Gaurav Gogoi had said on Friday that the Russia-Ukraine conflict had been simmering since December but the prices of fuel and cooking gas suddenly increased thrice this week.
Many Opposition leaders had also said their predictions that the fuel price would be increased after the Assembly elections have been proven right.
Finance Minister Nirmala Sitharaman dismissed the allegations by the Opposition that the fuel price hike and election were linked.
“We have not brought in extra burden,” she said in the Lok Sabha on Friday. “It [the fuel price hike] has nothing to do with election time. If the oil market companies think that they are procuring a 15-day average at a higher rate, obviously we will have to bear.”
She also said the war in Ukraine has impacted all countries by disrupting the supply chains.
“Even in 1951, [former Prime Minister] Pandit Jawaharlal Nehru could say that a Korean war can affect Indian inflation,” the minister said. “But if today in a globally connected world, we say that Ukraine [war] is affecting us, it is not accepted.”
She said that Prime Minister Narendra Modi believes in lowering the taxes and reducing the burden on the country’s citizens.
India’s state-run oil companies did not raise fuel prices since November 4, a move even observers attributed to the Assembly elections in the states of Uttar Pradesh, Punjab, Uttarakhand, Manipur and Goa. Higher fuel prices could have led to protests and harmed the Bharatiya Janata Party’s chances of winning the polls.
Similarly for 18 days in March and April last year, the prices of petrol and diesel remained unchanged as four states and a Union Territory went to polls. However, after the results were announced on May 2, the prices rose steadily to hit record levels.
Following the Russian invasion, oil companies had kept the rates steady despite surging global crude oil prices.
The three state-run fuel retailers – Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation – together lost around $2.25 billion (about Rs 19,000 crore) in revenue for keeping petrol and diesel prices on hold during the recent Assembly polls in the five states, Moody’s Investors Services said, reported PTI.
According to CRISIL Research, fuel prices needed to be increased by Rs 15 to Rs 20 per litre to fully pass the increase in international oil prices.