Lok Sabha Question No. 2683 (UNSTARRED), answered on 2023-03-16
Subject: Demand and Prices of Petroleum Products
Ministry: PETROLEUM AND NATURAL GAS
Asked by: D. M. Kathir Anand

## LOK SABHA

## UNSTARRED QUESTION NO. 2683 TO BE ANSWERED ON 16 MARCH, 2023

## Demand and Prices of Petroleum Products

## 2683. SHRI D.M. KATHIR ANAND:

## पेोलयम और ाक ृतक गैस मंी

Will the Minister of PETROLEUM AND NATURAL GAS be pleased to state:

(a)  whether  the  Government is aware of the fact that on one side the prices of Petrol, Diesel, Compressed Natural Gas (CNG), Liquefied Natural Gas (LNG), Liquefied Petroleum Gas (LPG) is escalating and on the other side the demand too is increasing and if so, the details thereof;

(b)  the  steps  taken  by  the  Government to meet the demand and supply and also to reduce the prices of Petrol, Diesel, CNG, LNG and LPG; and

(c)  the  effective  measures  taken  by  the  Government  to  control  further  hikes  in  the  prices  of Petrol, Diesel and Domestic LPG?

## ANSWER

## पेोलयम और ाक ृतक गैस मंालय म राय मंी ( ी रामेश ् वर तेल )

## MINISTER OF STATE IN THE MINISTRY OF PETROLEUM AND NATURAL GAS (SHRI RAMESWAR TELI)

(a) to (c): Prices  of  petrol  and  diesel  have  been  market-determined  with  effect  from 26.06.2010 and 19.10.2014 respectively. Since then, the Public Sector Oil Marketing Companies (OMCs) take appropriate decision on pricing of petrol and diesel. Public Sector Oil Marketing Companies (OMCs) have not increased prices of petrol and diesel since 6 th April 2022.

To  ensure  adequate  supply  of  petroleum  products  including  Petrol  and  Diesel  in  domestic markets, Government has taken several steps which include diversification of sources of crude oil, very high capacity utilisation of oil refineries, expansion of oil refineries, blending of ethanol in  Petrol  etc.  Further,  Government  has  made  it  obligatory  for  Oil  companies  including  PSU OMCs to sell 30% of diesel and 50% of petrol exports in domestic market. The consumption of petroleum products during April-Feb 2023 with a volume of 201.79 MMT reported a growth of 10.77% compared to the volume of 182.18 MMT during the same period of the previous year. This growth was led by 14.05% growth in petrol, 13.26% in diesel.

Central Government has reduced Central Excise duty by a total of Rs. 13/ litre and Rs. 16/ litre on petrol and diesel respectively in two tranches in November 2021 and May 2022. The excise reduction of May 2022 was fully passed on to consumers and retail prices fell as a result. The measure was aimed to give a further fillip to the economy and to boost consumption and keep inflation  low,  thus  helping  the  poor  and  middle  classes.  Subsequently,  many  States/UTs  have also reduced VAT rates on petrol and diesel.

Government  continues  to  modulate  the  effective  price  to  consumer  for  domestic  LPG.  The average Saudi Contract Prices (CP) on which the domestic LPG prices are based, increased from US$ 454/MT to US$ 693/MT during 2019-20 to 2021-22.  During 2022-23 the average Saudi CP has further risen to US$ 790 /MT for February 2023.

Indigenous production of  LPG in the country is  less  than  the  demand.  OMCs  import  LPG  to meet  this  deficit  and  maintain  smooth  supply  of  LPG  in  the  country.  The  supply-demand scenario is monitored on regular basis and additional imports are tied up as and when required.

The prices of Compressed Natural Gas (CNG) in any location is fixed by the authorised City Gas Distribution  (CGD)  entity  after  considering  cost  of  gas  procured,  State  taxes,  tariff  and  other components.

LNG (Liquefied Natural Gas) is imported by various natural gas consumers, marketeers etc. on long  term  contracts  and  in  spot  markets.  The  prices  of  LNG  are  commercially  agreed  upon between buyer and seller in the international market.

However, to reduce the impact of increase in international gas prices on CNG prices in India, Government  has  taken  various  steps,  including,  increasing  domestic  APM  gas  allocation  to CNG(Transport)  and  PNG  (Domestic)  by  about  250%  of  the  allocation  in  2013-14,  diverting domestic  gas  from  power  and  other  non-priority  sectors  to  meet  the  requirements  for  CNG (transport)  and  PNG  (domestic)  segments,  declaring  CNG(T)/PNG(D)  segment  as  the  first priority  for  allocation  of  domestic  natural  gas.  While  LNG  prices  in  the  international  market (JKM)  had  increased  by  327%  between  January  2021  and  November  2022,  they  have subsequently come down in the recent months.

Demand for CNG has increased over the years and has gone up to 5690 MMSCM in 2021-22 from 3674 MMSCM in 2020-21.