Output cuts by OPEC, COVID-19 main reasons behind fuel price hike: Oil Minister Dharmendra Pradhan

Union Petroleum Minister Dharmendra Pradhan (File Photo)

Union Petroleum Minister Dharmendra Pradhan (File Photo)

The recent output cuts by the Organisation of the Petroleum Exporting Countries (OPEC) and the outbreak of COVID-19 are the main reasons behind the fuel price hike in India, Union Petroleum Minister Dharmendra Pradhan said on February 21.

The crude prices have been going up in the international market since November 2020, with the Brent oil rate hovering above $ 60 over the past few days.

“There are two main reasons behind fuel price rise. International market has reduced fuel production and manufacturing countries are producing less fuel to gain more profit. This is making the consumer countries suffer,” news agency ANI quoted Pradhan as saying.

“We have continuously been urging the OPEC and OPEC+ countries that it should not happen. We hope there will be a change,” he added.

Also read: 5 things to know about the ‘out of control’ fuel price rise in India

The expenditure related to COVID-19 is also responsible for the fuel price hike, as states, Union territories and the Centre aims to raise revenue to fund various development works, the minister pointed out.

“Another reason (for the hike) is COVID. We’ve to do various development work. For this, the Centre and state governments collect tax. Spending on development work will generate more jobs. The government has increased its investment and 34 percent more capital spending will be done in this budget,” he said.

Pradhan, however, noted that a “balance” is required through intervention of the Finance Ministry.

“State governments will also increase spending. This is why we need this tax, but there is also the need for balance. I believe Finance Minister (Nirmala Sitharaman) can find a way,” he said.

A day earlier, Union Finance Minister Nirmala Sitharaman said the “Centre and states must talk” to decide on how the fuel prices can be brought down.

On the excise duty levied by the Centre on fuel, Sitharaman said there was “no guarantee” that, if the central government forwent its share, states would not fill the space.

Petrol prices have crossed Rs 100 in parts of Rajasthan and Madhya Pradesh. In Mumbai, the per-litre cost of petrol has reached Rs 97, whereas, the same has breached the Rs 90-mark in Delhi for the first time.