Nayara Energy reduces retail prices of petrol and diesel at its pumps by Rs 5 and Rs 3 respectively.
Private sector oil marketing company - Nayara Energy has initiated a reduction in the prices of petroleum products by reducing the retail prices of petrol and diesel at its pumps by Rs 5 and Rs 3 respectively. Nayara Energy, formerly known as Essar Oil, is the largest private sector oil marketing company in India. It has more than 7,000 petrol stations across the country. The company had adopted an independent approach during the oil crisis that arose during the war in West Asia.
Under this approach, it had increased petrol by Rs 5 and diesel by Rs 3 on March 26. At that time, crude oil prices in the international market were running at more than $100 per barrel. The company says that before the outbreak of the West Asia War on February 28, crude oil was being sold at an average price of $72 per barrel. At one point during the war, it reached $127. Now that it has come down to around $70, the company has no moral right to sell its products at a higher price. Therefore, the increase that was implemented on March 26 has been withdrawn. This withdrawal in itself is a completely reasonable step. It is a different matter that this step has definitely created a moral crisis for all the three public sector oil companies and other such companies in the private sector.
All three state-owned oil companies—Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum—had kept the retail prices of petrol and diesel at the levels they were before February 28 during the first two and a half months of the West Asia crisis. During those days, assembly elections were held in four states. The Modi government did not want the opposition parties to use the price of petrol and diesel as an issue for anti-government propaganda by increasing the prices. Strategically, this move was right, but it severely damaged the finances of the oil companies. That is why the period of increase in petrol and diesel prices began within seven days of the election results being announced, which lasted for seven days.
Public sector oil companies claim that they collectively suffered a daily loss of Rs 10,000 crore during the West Asia crisis. Now, due to the downward trend in crude oil prices, they are in a position where they are not suffering daily losses. Therefore, if they do not reduce retail prices further in the next few days, it will be possible to recover some of their financial losses. This argument is commercially sound, but morally it cannot be considered justified.
International crude oil prices have come down from $127 per barrel to $70-72. This decline is not a surprise, it is a result of the circumstances of the last one and a half months; especially since the day when US President Donald Trump abandoned his arrogant tone and indicated that he would walk the path of negotiation with Iran. It is true that every small or big incident in the Gulf of Hormuz still causes a surge in crude oil prices. However, this surge is not as severe as it was in March-April. Therefore, it is not unreasonable to expect public sector companies to think about the interests of the common man while protecting their respective financial resources.
India's neighboring countries - Pakistan and Bangladesh - have shown the courage to reduce the retail prices of petrol and diesel. The member countries of the European Union (EU) have also chosen the path of symbolic reduction. Pakistan has reduced petrol by Rs 74 and diesel by Rs 67. The new prices of these two oils are Rs 299.50 and Rs 311.47 per liter respectively. These prices seem very high to look at and hear.
But in a country where milk is sold at Rs 240 per litre and a bottle of water at Rs 64, petrol and diesel are sold at Rs 300. The Modi government has been known for its fiscal prudence. It is not unreasonable for it to give the state-owned oil companies the freedom to fill their respective coffers. However, as the Nayara company has shown, financial gain should not be the only business objective. Public interest should also be taken care of; especially by governments.
