Why are the prices of fuels rising in India?
See, fuel price has gone up because the international price for crude has shot up, the fuel price in India is linked to the international product price and the price of petrol internationally went up to almost $89-$90, now it has come down slightly. The international price of petrol and diesel used to be almost equal but now in the recent past– what we have seen is that the price of petrol has become much higher than the price of diesel internationally. The oil companies fixed their price based on the product price and therefore the price of petrol has been high and now it is a little bit stable for the last few days, but then we have these 15-day rolling average system. We expect that if the international price cools down a little bit, then things would be better.
I won’t be able to comment because fixation of price is based on a formula by oil marketing companies, there are taxes which are respective state governments, VAT is there and then certain taxes on the central government side and from the ministry side.
If we talk about the oil strategic reserves where a lot of development was expected, where the government has been also working on looking at an alternative strategy in the form of a public private partnerships–is that something on cards?
Yes, we are working on increasing the reserves here in India, we have to create more capacity and that capacity can come up in the private sector, it can come up in the public sector, our own refineries can set up more capacity, government can make investments and set up more capacity so government has already created capacity for storage which takes care of about 9 to 10 days of our current requirement.
We have plans to set up another capacity to take care of roughly 12 days of our current requirement, besides these refineries also have storage capacities, there is some storage in the pipelines also. Total storage which is available in the country as of now is a little more than 70 days of our current requirements and we want to take it a little higher for which we are working.
BPCL privatisation has been talk of the sector now so with two waves of COVID, this is a matter that is actually handled by DIPAM and Finance Ministry, but if we talk about the timeline–is the process still on track?
Yes, the process is on track. It is a slightly lengthy process, bidders are there, DIPAM handles and then there is transaction advises. We do not interact with the bidders at all from our side, We just provide support as and when required but what I understand is that the full process is on track, you can imagine that the size is huge so therefore bidders would need more information, they would have to form their consortiums, they would have to come to the stage of price bid. After that an evaluation happen and the company assets have to be valued. It therefore is a lengthy process and we are working with DIPAM on this.
FM had mentioned that the aim to complete BPCL privatisation this year itself, so you are telling me that is on track despite two waves of COVID?
Tarun Kapoor: Yes, yes.
has also written couple of request letters when it comes to the gas pricing formula, is the government planning to change or rework on the APM gas pricing formula?
ONGC has been writing to the government requesting for a change in the formula because they have been saying that the price of gas which they are getting currently is below the cost at which they produce that gas. Now, this formula is linked to the some of the international indices or benchmarks and it covers six month period prior to the period for which the prices fixed so therefore the current price is fixed based on the price which was there sometimes back when the international prices were very low. So, the current price is quite low but then as we move along and the international prices also gone up, they will reflect in the current formula the later periods or parts of the year and the price would work for ONGC also, so, they would be a little more comfortable even with the existing formula
But in the long run again the international price goes on very drastically and then their price also goes on very drastically that is what they are worried about. So, they have been writing to us, we are examining their request– see if we can have a relook at the formula. Other side argument is that this gas is mostly going towards priority areas like say fertilisers, power generation and also city gas distribution, piped natural gas going to homes and CNG where we would not like price rise too much. It is just a question of trying to balance.
Ethanol is yet another priority sector that your ministry has been working on and lot of achievement we have seen when it comes to the blending target. How it is proving to reach to that step of an alternative fuel? Is the government planning on increasing the blending?
So, we have had very good success during this year, blending percentage last year was 5%. This year, we are going to cross 8%. In the current months and last month also, the blending percentage is over 9%, but in previous months it was a little low, average is now coming closer to 8% and we hope to procure about 330-340 crore litres this year against 173 crore litres last year. Currently in the country the petrol being sold with 10% ethanol which is E10 and then the target is to reach E20 by 2025 which we will certainly achieve. Next year, all the petrol sold in the country would be all E10 and then gradually we will move on to higher blends.
We have also introduced E100 already and it is being dispensed in Pune. The motor vehicle manufacturers have to aid vehicles which are compatible with E20 so that is what we are now looking forward to and as soon as that happens we will start rolling out E20. Target is—- we have already notified that we will introduce E20 from first April 2023 and then keep ramping up so that by 2025 all over the country it is just E20 and then we would have reach that stage. Parallely E100 would also be there at that stage, we would be procuring something like 1000 crore litres of ethanol which is worth say Rs 50,000 crore every year. So, we are generating economic activity worth that -within the country which will lead to jobs and lot of manufacturing facilities coming up in India and farmers also gaining from it, so it creates a full value chain.
The above news was originally posted on economictimes.indiatimes.com