On a day when petrol crossed the Rs 100 mark, Prime Minister Narendra Modi said the middle-class would not have been burdened if the previous governments had focussed on reducing India’s energy import dependence. Without referring to the relentless increase in retail fuel prices, which are linked to international rates, he said India imported over 85% of its oil needs in the 2019-20 financial year and 53% of its gas requirement. Price of petrol crossed the Rs 100 per litre mark in Rajasthan after fuel rates were hiked for the ninth day in a row. Since India imports the majority of its oil needs, retail rates are benchmarked to international prices, which have spiralled in recent weeks.
Opposition parties including Congress have criticised the price hikes, blaming it on the Modi government raising taxes to scoop out the benefit that arose from international oil rates plunging to a two-decade low in April/May last year. While global rates have rebounded with pick up in demand, the government has not restored the taxes, which are at a record high. Central and state taxes make up for 60% of the retail selling price of petrol and over 54% of diesel.
The Prime Minister further said it was a collective duty to work towards clean and green sources of energy as well as energy independence. “Our government is sensitive to the concerns of the middle class. That is why India is now increasing the focus on ethanol to help farmers and consumers,” he said.
Ethanol extracted from sugarcane is being doped in petrol to reduce the requirement of imports. Currently, 8.5% of petrol is ethanol and this proportion is targeted to be raised to 20% by 2025, helping cut imports as well as give farmers an alternate source of income. India, he said, is looking to cut energy import dependence as well as diversify its sources to reduce risks. The focus now is also towards using renewable sources of energy, which will by 2030 form 40% of energy generated in the country, he said, listing measures such as increased share of solar power, focus on public transport, switching to LED bulbs, scrappage policy for vehicles and use of solar pumps in irrigation.
“Today, India is increasing the share of energy from renewable sources. By 2030, 40% of all energy will be generated from green energy sources,” he said. Modi further said India is looking to reduce energy import dependence through capacity building. “In 2019-20, we were fourth in the world in (oil) refining capacity. About 65.2 million tonnes of petroleum product have been exported. This number is expected to rise even further.”
Also, Indian firms have ventured overseas in the acquisition of oil and gas assets, which provide energy security. Today Indian oil and gas companies are present in 27 countries with an investment worth about Rs 2.70 lakh crore. Modi said the nation is looking to build a natural gas pipeline grid to boost usage of the environment-friendly fuel that would help cut carbon emissions.
“We have planned to spend Rs 7.5 lakh crore in creating oil and gas infrastructure over five years. A strong emphasis has been laid on the expansion of city gas distribution network by covering 470 districts,” he said.
City gas projects will provide clean cooking fuel to households in form of piped natural gas, alternate transport fuel as CNG to vehicles and feedstock and fuel to industries. The government is working towards raising the share of natural gas in the energy basket to 15% from the current 6.3% and is committed to bringing it under the Goods and Services Tax (GST) regime to eliminate cascading effect of multiple taxes, he added.
“We are trying to eliminate the cascading effect of different taxes on natural gas across different states,” he said adding this would help bring down the cost of gas. “We are eager to increase the share of natural gas in energy basket from 6.3% currently to 15%. We are committed to bringing natural gas under the GST regime,” he said.
When the GST in 2017 subsumed over a dozen central and states taxes, five products crude oil, natural gas, petrol, diesel and jet fuel (ATF) were kept out of it for the time being. This has meant that taxes paid on inputs cannot be offset by taxes on the final product.
“Since 2014, we have brought in various reforms across the oil and gas sector, covering exploration and production, natural gas marketing and distribution. We are working on attracting domestic and international investment through investor-friendly measures,” Modi said. “I want to tell the world come invest in India’s energy.”
