If we have to run a business, cross-subsidisation always happens: Oil Minister HS Puri

Who footed the bill last time? Again, you are talking about under-recovery. Pardon my saying it, but nobody understands what under recovery is, including very senior people. Let me explain it to you. Where does a private company get money from? The company’s money comes from shareholders. What will that company say to shareholders that it has reduced costs for a particular person? A shareholder will say that this particular person is not my relative, and I am an investor, so please explain to me. What will the company say? We appeal to companies and their sense of being good corporate citizens. I can’t direct them. Because they are my friends and they are participants in the co-prosperity sphere that we are trying to describe, they join us.

What happened last time? They incurred losses of ₹28,000 crore as LPG prices rose by 303 per cent. The domestic prices would have gone up to ₹2,100 or ₹2,700 a cylinder, but we kept them low at ₹1,100. That led to losses. Will they pay it out of their own pocket? No. We are a responsible government. We saw that they supported us during the crisis. We discussed it with them and said that we could not compensate the entire ₹28,000 crore. They said compensate us to the extent you deem fit. So we compensated them with ₹22,000 crore.

We told PSU OMCs that you are good corporate citizens. They agreed (on petrol and diesel prices). The private sector did not agree. They talked about under-recovery and over-recovery. We said fine, we cannot force you. We have around 80,000 retail fuel pumps of which around 22,000 are with private sector. They put boards that petrol and diesel prices are cheaper than PSU pumps. We did nothing. But it impacted our trust in them to some extent and if you come to meet me, after doing such a thing, you will not get the same amount of warmth. Then we saw that they are down to a conduct which will affect my national interest. We said sorry and made a certain percentage mandatory for them to sell (in domestic market)

It’s a little more complicated than that. Energy economics is a very complex thing. Talk to the private sector on this. They say that we raise capital and pay interest on it. When we pay interest, we don’t say it came from here or there. There are correlations you and I are forming in our minds. Running a business is a little more difficult than running, let’s say, an office, a newspaper, or a TV channel. So, this is partly not. So, I can say that Q1 FY24 has been a reasonably good quarter. The second quarter’s July and August have happened, and they have been reasonable. I expect September will be good, too. Now, coming forward, if we have to run a business, cross-subsidisation always happens. You erect a building for the economically weaker sections. This section does not have full capacity to invest. The same happens in Switzerland and here as well. What you do is pad up some costs for the affluent section. This is how the world operates.

In petrol and diesel, we offered an equity infusion of ₹30,000 crore. We said we would not compensate. Who will compensate for LPG? is a question emanating from people who either don’t want to understand it or who want to create a narrative out of it. If we had not offered ₹30,000 crore equity, where would the PSUs have gone? But we have a stake in the viability of the PSUs, which is why we encourage them.

We have managed well so far. Going forward, I don’t know what the situation is likely to be. But I think that as our oil companies have done a good first quarter (Q1 FY24). The ₹200 (LPG cylinder) gas reduction, we have the confidence to do it because we have the confidence to sustain it.

Knee-jerk reactions, like the one by the last government’s Oil Minister Veerappa Moily. What he did was that he issued a statement on September 1, 2013, saying that petrol is creating problems so petrol pumps should be closed from 8PM to 8AM. That’s one way of looking at it.

On the other hand, we were very relaxed. We have never taken an ideological position. If Russian oil prices increase or discounts decrease, we will buy from those who offer more discounts. Will buy from Iraq. Some countries charge a premium, so we buy less from them. This (buying crude oil) is done through an open and transparent tender. That is a process.

Will the government also reduce Petrol and diesel prices?

You should not be asking me this question. You should ask all the non-BJP states. The centre has cut cess and excise. The BJP states have reduced VAT, but they have not done it. With what face will they talk to us?