Petrol price rise: India raises Asia premium issue with Opec

Oil minister Dharmendra Pradhan. The petroleum ministry deliberated upon issues of output cuts by Opec resulting in high volatility and increased oil prices but the cartel says no Asian premium is charged. Photo: Reuters

New Delhi: With domestic petrol rates hitting a 4-year peak and diesel at an all-time high, India on Tuesday again raised with oil cartel Organization of the Petroleum Exporting Countries (Opec) the issue of premium its member nations charge from their Asian buyers.

Reiterating New Delhi’s decade-old demand, oil minister Dharmendra Pradhan raised the Asian premium issue with visiting Opec secretary general Mohammad Sanusi Barkindo in New Delhi on Tuesday.

“Deliberated upon issues of output cuts by #OPEC resulting in high volatility and increased oil prices and it’s effect it has on a price sensitive country like India,” the petroleum ministry tweeted about the meeting.

Pradhan’s predecessors, particularly Mani Shankar Aiyar, had in past vociferously raised the issue of Opec members charging the so-called premium from Asian buyers but the cartel says no premium is charged.

“Both of them had substantive discussions on the issue of Asian premium and responsible pricing. Min. @dpradhanbjp stressed on an ‘Asian Dividend’ rather than premiums for a reliable and continued consumer like India,” the ministry said in another tweet.

India sources about 86% of crude oil, 75% of natural gas and 95% of LPG from Opec member countries. With India being over 80% dependent on imports to meet its oil needs, a recent firming of international rates has sent domestic fuel rates higher.

Petrol prices have hit a four-year high while diesel rates have touched an all-time high in the national capital. Petrol in the national capital now costs Rs73.98 a litre, the highest since 14 September 2014, when rates had hit Rs76.06.

Diesel price at Rs64.96 is the highest ever. India has the highest retail prices of petrol and diesel among South Asian nations as taxes account for half of the pump rates. The government raised excise duty nine times 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 Rs2 a litre.

In all, excise duty on petrol was raised by Rs11.77 per litre between November 2014 and January 2016 and that on diesel by Rs13.47 a litre, helping government’s excise mop up more than double to Rs2,42,000 crore in 2016-17 from Rs99,000 crore in 2014-15.

Subsequent to the October 2017 excise duty reduction, the centre had asked states to also lower VAT but just four of them—Maharashtra, Gujarat, Madhya Pradesh and Himachal Pradesh—reduced rates while others including BJP-ruled ones ignored the call.