India-Russia Crude Oil Deal Could Cushion Sharp Rise In Fuel Prices

New Delhi: In Central Excise Duty, the government sources have ruled out a cut on petrol and diesel as the freeze in revision of prices during the elections in the state assemblies, is hurting the companies manufacturing oil.

The sources have said the government has came up with a plan to cushion the impact of a sharp rise in fuel prices due to increase in global crude trends once the freeze in daily revision is lifted. Sources confirm that a crude deal with Russia at softer than market rates is being stitched as a remedy.

A cut in excise component in fuel costs can permit the public sector oil companies for rising the prices of petrol, diesel and other products without hurting the consumer further. The prices of fuel are stable since the central government cut excise duty on petrol by Rs 5 and on diesel by Rs 10 for bringing down retail rates from a record high in November last.

Currently the Centre Centre levies excise to the tune of 27.90 a liter on petrol and 21.80 a liter on diesel.  The sources of Finance Ministry  told India Today TV that there is no excise duty revision proposal on the table at the moment.

Russia Ukraine War Effect

This has maintained high but stable prices for consumers despite a huge spike in crude prices following the Russian invasion of Ukraine, stable revenue for the central and state governments, but by not passing on the rise and fall in international prices to domestic consumers, oil companies have been experiencing unusual expansion and contraction in their margins.

The rate of an Indian basket of crude oil surged to $128.24 a barrel on March 9 from $117.39 on March 3. Crude is currently trading at $100 per barrel.

In mid-February the estimation was that oil companies, to arrive at a stable margin, need to raise the per liter price of fuels by Rs 5-6.

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