Oil Secretary, Tarun Kapoor on Oil strategic reserves
Why are fuel prices rising in India?
Fuel prices are rising because the international crude price has gone up, the fuel price in India is linked to the international product price. The price of petrol internationally went up to around $89 to $90 but is coming down slightly.
The prices of petrol and diesel used to be equal internationally, but as we have seen in the recent past, the price of petrol has become much higher than diesel.
The oil companies have to fix their price according to the international product price, therefore, the petrol price has been higher but it has been a little bit stable from the past few days. We expect that if international prices go down a little, things will get better.
A lot of development was expected in the field of oil strategic reserve as the government was also working on an alternate strategy in the form of public-private partnership– Is something to be expected?
Yes, we are working on increasing the reserves in India, for that we have to create more capacity and it comes up in the private and public sector, our own refineries can set up more capacity, the government can make the investments to set up more so they have already created capacity for the storage which takes care of about 9 to 10 days of current requirement.
Total storage available in the country right now is a little more than Seventy days of current requirements, and we are working on making it a little higher.
BPCL privatization is actually handled by DIPAM and the Ministry of Finance, but if we talk about the timeline, is the process still on track?
It is on track, but it is a lengthy process, bidders are there, and then transaction advice is also there. We don’t interact with the bidders from our side at all.
We provide the necessary support but the full process is on track as per my understanding, as the size is huge, so the bidder would need more information and form their consortium, come to stage for the bid price. So all in all it’s a lengthy process, and we are working on it with DIPAM.
IS the BPCL privatization still on track despite the two Covid waves?
Tarun Kapoor: Yes.
Is the government planning to rework the APM gas pricing formula, as requested by ONGC in the request letters?
They have requested it because they have been saying that the production price of gas is higher than the price they are getting. This formula is based on some international benchmarks and covers a 6 month period prior to the period for which the prices are fixed, so the current price is fixed based on previous prices when international prices were low.
But as we move forward the price would work out for ONGC and they would be more comfortable with the existing formula.
How is ethanol provided to reach the step of alternating fuel? Is the government planning on increasing this blending?
We have had quite a success with the blending as the average has gone up to 8% this year from the 5% last year. And we are hoping to procure around 330-340 crore litres this year against the 173 crores last year.
The petrol is currently sold with 10% ethanol which is E10, we will certainly achieve the target of E20 by 2025. All the petrol sold next year would be E10 and we’ll gradually move on higher.
We have already introduced E100 being dispensed in Pune. The manufacturers have to aid vehicles compatible with E20, as soon as it is done it will start rolling out.
We have already been notified that E20 will start from April 2023 and by 2025 it will be all over the country. We will parallel be working on E100 and procure around 1000 crore litres every year which would cost around 50,000 crores every year.