A further increase in petrol and diesel prices may become unavoidable if the ongoing global energy disruptions continue, Bharat Petroleum Corporation Limited (BPCL) director HR Raj Kumar Dubey said.
Speaking about the pressure on fuel retailers amid rising crude oil prices, Dubey said policymakers currently have limited options to deal with the situation.
“Now, there are two or three options open. One is the price hike, or the hike should be visible at the petrol pumps either there, or the petroleum companies take up the losses and make up more and more losses. And the third is the government funds through deficit financing,” he said, as quoted by news agency ANI.
Dubey noted that crude price increases of 20% to 50% were initially considered temporary, but warned that the disruption could continue for a longer period.
“The way things are panning out, I think this is going to continue,” he said, pointing to the destruction of energy infrastructure due to the ongoing West Asia conflict.
“So with this current scenario, if this scenario continues, then I think another price hike should be there,” he added.
Fuel price hikes already underway
His remarks come days after state-run oil companies raised petrol and diesel prices for the third time this month.
Petrol and diesel prices were increased by nearly 90 paise per litre on Saturday as oil marketing companies attempted to offset mounting losses caused by crude prices remaining above $100 per barrel.
With the latest revision, petrol in Delhi now costs Rs 99.51 per litre while diesel is priced at Rs 92.49 per litre.
Oil companies are still facing under-recoveries of around Rs 13 per litre on petrol and Rs 38 per litre on diesel despite recent hikes.
Retail fuel prices have remained under pressure after global crude prices surged more than 50% since the beginning of the Iran war in February, disrupting energy flows through the Strait of Hormuz.
India diversifying oil supply sources
Dubey said India has managed to avoid fuel shortages through diversification of oil imports despite disruptions around the Strait of Hormuz.
“With more than 2 million barrels of oil being stopped at the Straits of Hormuz, managing this is possible through the diversification of supply sources only. Whether it is Russian oil or whether it is from Africa or from many other places,” he said.
He added that Indian energy companies have significantly expanded their sourcing network.
“Earlier, we used to have only 20 supply points. From 20, we have gone to 40 supply points now, which includes Russia also,” Dubey said.
“To that extent, the diversified supply lines are giving us enough security,” he added, noting that India’s fuel consumption has increased even during the conflict period without creating shortages.
India has increasingly relied on Russian crude and alternative suppliers such as Venezuela, Brazil and African producers to offset weaker Middle East supplies amid the disruption in Hormuz-linked trade routes.
Push towards green energy
Dubey also said the crisis is expected to accelerate India’s transition towards cleaner energy sources.
“With more than 200 GW of solar power installed, the momentum will increase now because the kind of foreign exchange problems this energy import bill brings, I think it will definitely accelerate towards the green energy options,” he said.
He highlighted the government’s push to raise natural gas to 15% of India’s energy mix from the current 7-8%, along with greater focus on compressed biogas (CBG), ethanol blending and hydrogen fuel.
Calling the ethanol blending programme a “very proactive stand”, Dubey said the initiative had helped avoid additional petrol shortages and pressure on foreign exchange reserves.
“Accelerating our efforts towards hydrogen as a fuel, as a very sustainable fuel for the future... these are some of the things we need to do,” he added.
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