Finance minister blames war in Ukraine for biggest fuel price hike ever

The finance minister blamed the war in Ukraine for supply chain disruptions, and the unprecedented rise in global oil prices over ‘a few weeks’ led to the largest ever rise in gasoline prices and diesel.

She also defended the upcoming fuel price hike after national elections and a four-month hiatus in the price review, saying the unprecedented rise in global oil prices was a “weeks-long” phenomenon that has leads to state-run fuel retailers. price increase.

Responding to a 2022-23 budget debate in Rajya Sabha, she said opposition members had said war in Ukraine had been raging for a long time and fuel prices were rising.

“Absolutely false,” she said. “The disruption and resulting increase in the global oil price and supply disruption has been happening for the past few weeks, and we are responding to it.”

The finance minister said the unprecedented rise in the price of oil was a challenge.

Fuel prices have remained stable for more than four months despite soaring crude oil prices. The rate review ended on March 22.

In total, petrol and diesel prices rose by ₹5.60 per liter each after eight rate reviews in the last nine days from Wednesday, the biggest rise since the review was implemented price daily in June 2017.

Crude oil prices have soared since Russia invaded Ukraine on Feb. 24, with benchmark Brent crude hitting multi-decade highs near $140 a barrel. While crude oil prices have been whipped since then, they have remained above the $100 mark.

The last time the central government intervened was on November 4, 2021, on the eve of Diwali, when excise duties were cut on fuel across the country, after petrol prices and of diesel reached a record high of ₹110.04 and ₹98.42 per liter respectively in Delhi on November 3, after seven consecutive increases.

While fuel prices have been increased eight times in the past nine days, gasoline and diesel prices in the nation’s capital are still below the record high reached in November.

Ms Sitharaman said the government was taking various measures in response to rising global oil prices.

PTI reported that it blamed the United Progressive Alliance (UPA) government’s issuance of bonds more than a decade ago to oil companies to offset losses they suffered from selling oil. automotive and cooking fuel at below cost.

“Today’s taxpayers are paying for subsidies given to consumers over a decade ago in the name of oil bonds. And they will continue to pay for the next five years as bond repayments continue through 2026. “, she said. cash value at Rs 2 lakh crore.

To the opposition party’s claim that oil bonds were first issued by the Bharatiya Janata Party (BJP) government between 1999 and 2004, she said that the government of Atal Bihari Vajpayee had issued bonds worth Rs 9,000 crore compared to Rs 2 lakh crore by UPA.

International oil prices under the Vajpayee government were below $30 a barrel. At the same time, they hit record highs of $147 under the UPA, necessitating higher support in the form of oil bonds.

She said the oil bonds issued by the Vajpayee government were “a one-time action rather than a continuous policy (as in the UPA)”. “There is a huge difference in magnitude between Rs 9,000 crore which had to be repaid once from the Vajpayee government’s oil bond account and more than Rs 2 lakh crore which was raised during the UPA and which is paid even now,” she mentioned.

“Funding higher cost oil has an honest way of doing it and how you reserve it for someone else and another government keeps paying for it. We haven’t done that,” Ms Sitharaman pointed out. .

While the war in Ukraine brought new challenges in the form of rising international oil prices and supply chain disruptions, she said inflation was under control.