Union BJP Finance Minister Nirmala Sitharaman on 5 September last defended the windfall tax on domestically produced crude oil and additional tax on exports of refined petroleum products, saying the levy has been imposed in full consultation with the industry. ‘‘Let me tell you frankly that … that India wants to be a refining hub, India wants to encourage investments in refineries, and India wants to… ensure that profitability is not taxed with the intension to earn revenue for the government…So, the belief that windfall tax is ad hoc is slightly unfair. Because the price and the taxation rate decided are arrived at after full consultation with the industry. We’ve come up with these parameters based on cracks margins that the industry has given to us,’’ she told a summit organised by Elara Capital. The minister added that she had clearly said everything would be done in consultation with the industry and it is doing that every 15th day.
So, she confesses that the government does everything in consultation with the industrial houses and ensure that their profits are not taxed. Great indeed! The common Indians are bearing the brunt of sky-high escalation of fuel prices but the government is deciding the fiscal policies only with the industry barons.
Further, the government has been repeatedly saying that retail tariff of fuel is spiralling because of rise in importing crude. But it is now revealed that India is importing not only crude oil but also cheaper refined fuels from Russia. India had brought more than 40 million barrels of Russian oil between late-February and early-May, which comes to about 20% more than flows for all of 2021, according to Bloomberg calculations based on trade data. Imports of Russian refined products have tripled in recent months from the preceding three-year average. In August 2022, the average monthly price of Urals crude oil, Russia’s major export oil brand, was approximately 74.7 U.S. dollars per barrel when international oil price was hovering around $100. But the benefit has not been passed on to the countrymen. It is also reported that Mukesh Ambani-led Reliance Industries Ltd saw a 46.3 per cent jump in April-June quarter as robust refining margins due to intake of cheaper Russian crude and fuel exports buoyed its dominant oil-to-chemicals business. The consolidated profit of Reliance rose to Rs 179.55 billion ($2.25 billion) in the three months ended 30 June 2022 compared with Rs 122.73 billion a year earlier. Indian Oil Corporation (IOC), the nation’s top oil firm in public sector, had also brought as much as 3 million barrels of crude oil that Russia had offered at deep discount to prevailing international rates.
What is not known to many is that India is a net exporter of refined products. India exported 5.7 million metric tonnes (MMT) of petroleum products in May, 6% higher than in April 2022. Indian refiners have been working overtime to meet the soaring fuel demand. The average run at Indian refineries has jumped to 110% in May from 93% a year. In April-June, it exported nearly 60% more products in volume terms than it imported, with the biggest export items being diesel, petrol, jet fuel and naphtha. Indian state-run refineries took around 60% of the Russian volumes in July. The biggest volumes of 250,000 bpd were discharged at Sikka port, which serves Ambani-owned Reliance Industries refining complex in Jamnagar. It was followed by Adani-owned Mundra port (240,000 bpd), which has pipeline connection to HMEL’s Bathinda and Indian Oil’s Panipat and Mathura refineries.
So, when the citizens of the country are bleeding white because of exorbitant rise in petrol-diesel entailing phenomenal spurt in general price line of all essential items, the two monopoly houses reportedly close to the ruling party are reaping huge profit from oil business. Also, when domestic supply is squeezed, export of oil is rising. Moreover, the very fact of importing Russian oil at a very cheap price is also suppressed lest there should be question about retail tariff being so high. This is how the BJP government is defrauding people while ensuring profit splurge of monopoly tycoons.
(Source–Times of India 17-03-22, NDTV 19-03-22, The, Economic Times 27-06-22,08-08-22, Economic Times Energy World 23-06-22, The Print 05-09-22, Statistica.com 04-09-22)