India's petroleum minister Hardeep Puri praises OMCs as exemplary corporate citizens for consumer support

The Ujjwala scheme, launched in 2016, has been instrumental in providing access to clean cooking fuel to millions of low-income households. This latest relief initiative reinforces the government's commitment to ensuring that Ujjwala beneficiaries continue to enjoy the benefits of affordable and clean cooking gas.

A: Let me run you through some of the basics of arithmetic, I don't even call it the economics, you are absolutely right there is a Rs 200 cut in price for the LPG - liquefied petroleum gas cylinder. Today, we have approximately 32 crore connections. In 2014, the number of connections was about 14 crore, and 45 percent of our population which is a population of users was outside this LPG cylinder system. What does that mean cylinders were difficult to get, there was a black market for the cylinders, people had to bribe their way through the supply man, etc, and all kinds of things happened. We brought that from 14 crore connections to 32 crore connections.

Today, an LPG cylinder is available wherever you want it, in any part of the country and we are augmenting that through the supply of natural gas through a pipeline. We had 14,000 kilometres of pipeline in 2014. We have taken that to about 23,500 kilometres of pipeline and we are hoping, to raise it to 33,000 kilometres of the pipeline before long.

Now let me come back to cylinder and subsidies and cut in prices. It's a very interesting system. If you go into whether there are recoveries, under recoveries, etc, you will never be able to get precise answers. For instance, for gas pricing on natural gas, we have had to introduce formulae in order to insulate the consumer. Here, what we have done is it's a Rs 200 straight cut for every LPG cylinder and in addition to that the beneficiaries of the Ujjwala Scheme till yesterday, were 9 crore 60 lakh, all of them were getting at Rs 200 payment under DBT, which was going straight into their accounts, for them it's a Rs 400 benefit that is Rs 200 gas cylinders reduction from Rs 1,100 to 900 plus their subsidies come down to Rs 700.

So it's a combination of a very bold political decision by the honorable Prime Minister and a decision that has a far-reaching impact on the entire economy, the benefit to our sisters, which is a gift from him on the occasion of Onam and Raksha Bandhan. As in the past the OMCSs as good corporate citizens took a loss later on, they were reimbursed what will happen now, because of the recovery situation, OMCs in the first quarter of the financial year, I am talking about April, May, and June, they all posted very healthy profits.

Today, I can tell you with confidence, that OMCs have demonstrated that they are good corporate citizens. So who's the beneficiary, the consumer and the economy overall, because the economy has been insulated from all the shocks? You have got enough availability, you have good affordability and you have got a very good track record on green transition and sustainability.

So the honorable Prime Minister has made it possible to make this timely decision massively on the benefit to the consumer, with every part of the ecosystem, both the OMCs and the state collaborating in order to make it possible.

A: Let me start with an opening thing that I am normally not confident in addressing hypothetical situations. The good news is so far, everybody has cooperated you have been able to ensure that petrol and diesel prices have come down in the last two years. 5 percent is a petrol price decline, 0.28 percent decline in diesel prices, and LPG cylinders, despite the Saudi CPU having gone up at 303 percent we allow the increase only to up to about 60- 63 percent. So there is a mutual give and take in all this.

What would happen further? As I mentioned to you, the first quarter, April, May, and June has been good. They have posted reasonable returns, and some of them have posted more than reasonable returns. The next quarter we are talking about is July, August, and September we are almost at the point of two months over and the third month starting. I have no doubt that the good performance of the first quarter could well be continued into the second quarter also, that's half the year. Now, how do we deal with the situation? Supposing some zigzags or under-recoveries take place, we have the confidence, that we have the bandwidth of dealing with it between the OMCs and the government. So I am confident that we will be able to navigate the situation further both on availability and affordability.

A: I have a very simple answer to this. Number one, the average, you take out how many people took one position in terms of refills on Ujjwala is very simple. You are allowed to take up to 12 but no household uses 12 refills not even the households which are in a situation of marginal or affluent subsistence you don't need a 12-cylinder so the average has gone up from 3 cylinders to 3.7 cylinders. What is happening, on average consumption is increasing from 3 to 3.7 and I must tell you, the subsidy has not gone up from Rs 200 to 400. The subsidy continues to be Rs 200 for every Ujjwala beneficiary, except that the number of beneficiaries are going to increase from 9 crore 60 lakhs to 10 crore 35 lakhs. In addition, what will happen is, that there are some people who are getting access to other mediums or there are some people who feel that this average of 3.7 is close to 4 cylinders per family. In my assessment, and I have done a fair amount of studying on these 4 cylinders plus is what an average household with a small family size would use.

A: The number of people who are beneficiaries of piped gas through a connection has gone up from 25 lakhs in 2014 to 1 crore 25 lakhs or more and it's increasing all the time. The second issue pipe gas is considerably cheaper than LPG. What I want to tell you is essentially and in terms of sequence, the first step must be for the BJP central government and states to reduce their excise on two occasions November 21, and May 2022. All the BJP states reduce their VAT so I think it stands to reason that the non-BJP state should now bring down their VAT. They have been increasing it, and Punjab increased it so I request you through your good offices send the message out that the non-BJP states instead of sending criticism our way should look inwards and reduce the rate.

And I promise you, we always like to meet our friends and collaborators at least halfway. I think more such happy decisions, as were announced by the honorable Prime Minister, once the non-BJP states reduce their VAT, I will become an advocate for further reduction provided the non-BJP states do their job first, and then we will step in to see what more can be done if the results are good.

A: Well, that's the construct you have put on it, that the non-BJP states must cut VAT first. I am not given to speculation but I am going to tell you in terms of the doctrine of common sense, the central government reduced excise on two occasions, and BJP states reduced the VAT otherwise, we will have a band of guys who are criticising us all the time and then raising their own revenue which they put to non-productive uses. I mean, you have got a government in Punjab and a government in Delhi that admitted to a party, they have admitted to spending Rs 1,100 crore on advertisements and they couldn't pay Rs 400 crore for the RRTS project equally. They are raking it in on liquor both legit and the scandal part and they are not reducing a VAT in Punjab.

In fact, they increased the VAT recently. So all I am saying is yes, I'm in a slightly negotiating mood but I am not the guy who calls the shots. Yes, if the BJP states can reduce VAT, so can the non-BJP states reduce VAT, and if they reduce the VAT, we would be very happy.

A: If you are concerned about inflation, about which we are all concerned, there's always a case to be made out for ensuring that there are no interest rate hikes and not adding to an inflationary situation making sure fuel prices are lower. That's a case which is always there. But you and I live also in a world that could broadly be characterised as a political world. You want me to reduce excise, which I did, you want the BJP states to reduce VAT, which they did. Now, we'll all talk about inflation, let's start with the reduction of VAT in the non-BJP states. And then what my senior colleague Nirmala Sitharaman is tasked to do, what the RBI is tasked to do, I will sit down with them and see what more we can do in this sector.

A: I can always trust you to ask questions that help improve my understanding. First of all, there is no question of any deliberate decision by us to import more or less from a particular source. The government has nothing to do with this. The importation is being done by the private sector and the public sector companies. And they do it in a very transparent way. What they do is they float a tender and ask for prices for delivery at our port, and whoever has the lowest price they import from that. Insofar as Russia is concerned, you're absolutely right, the month you named, there was a decline of 5.7 percent in this thing. But you know, this is a dynamic situation. I mean, when the military action took place, from Russia to Ukraine, and talking about February of 2022, at that point of time, we were importing hardly any oil from Russia, I think it was 0.2 percent. In the first two months after that there was a sudden increase in imports from Russia, why? It's a price sensitivity issue. You have a situation where earlier 5 million barrels of oil that we consumed, about four or five sources supplied 8,00,000 barrels a day or roughly there about then what happened is the imports from one particular source went up came down. Today you have a situation where from two of our sources - Russia is down 5.7 percent and may come down further if what you say is correct. Saudi Arabia, which was our major supplier, there's a reduction but there is a reason for that reduction. The reason is that Saudi Arabia charges something called an Asian premium, which is for countries in Asia to look at the differential between prices to Europe. Now so obviously, if the importer, whoever it is, it's private sector Reliance or Indian Oil or whoever it is in the public sector, these are global companies, one of them is the world's seventh largest company, the others are very big international companies, they will buy the cheapest. So this is a dynamic situation, which will go on altering based on the current global situation.

However two messages I want to give you, one, we are doing well, we are navigating it well essentially because we are playing the market card. If somebody comes and tells me, you have no choice but to buy more expensive from me. I told him we used to buy from 27 countries now we buy from 39 countries. If you sell more expensive I may have a cheaper supplier. Did you ever imagine that we would be buying $20 billion of energy from the United States in a year? I was Joint Secretary on the Americas desk, I could never have dreamt of it.

A: These are transaction-based values. I don't think anybody is going to look at an average price. There was a time when there were very high Russian discounts. There was another time very high discounts from some of the Middle East suppliers. And then it's not a question of what discount they're giving you have to factor in the freight and the insurance.

If you have a point proximate to India, in the Gulf, obviously, the freight cost is much less. On the other hand, it depends on which Russian port you're going to get it from. If you get it from some of the Northern ports, then the cost of freight is even more. It's a very complex system. But as far as we are concerned, it's not the government that does the buying. It is the companies that do the buying based on transparent tenders.

Today, India is one of the large markets for crude, and it's a place for energy, where things are happening, our E&P is going up, and our transition to green energy is gaining momentum. So there are a lot of people who would want to come in here and partner. Most of the world's largest exploration and production companies have now got ties up here, and the green hydrogen story is moving well. So this is a situation which can move dramatically. If somebody is undertaking voluntary production cuts, which is what is happening in OPEC plus, well, they're trying to keep the price high. On the other hand, through sensible buying, we will try and buy at the lowest price, there will come a time, if the price is too high, people will not buy. There's a large economy in the world, which has a $16 trillion economy, you know for a fact that there are economic problems there, their capacity to buy, even at the current levels may not be sustainable for a period of time.

A: First of all, there are separate issues involved in your question. One is, overall capital expenditure all of them are meeting their capital expenditure targets very satisfactorily. If you're talking about green hydrogen and the move towards green hydrogen, I'm happy about the fact that these companies are dealing with it, IOCL has 11 refineries, and I think two are going to be producing green hydrogen. I'd like to see them add another three or four to them equally with BPCL and the others.

The fact of the matter is, there is a lot of international money coming into the green hydrogen story in India. I know one company that has brought in $32 billion of investment, they're setting up plants all along the Indian coastline. They've already entered into contracts to supply green ammonia to Germany, and green ammonia to Singapore.

Hydrogen or a gas does not lend itself to transportation. Therefore it stands to reason that green hydrogen will succeed and succeed famously in large consuming countries like the United States and India. Why? There has to be a local demand, then there has to be a capacity to produce- every electrolyser manufacturer in the world that I'm aware of is tied up with some company in India. The government stepped in after the Prime Minister made a statement on 15th August 2021 from the Red Fort that we will do green hydrogen in mission mode. Now, the government stepped in with the inclusion of a provision of Rs 19,700 crore under PLI.

In addition to that you need cheap green energy. We are one country in the world that has demonstrated that we have brought down the price of a unit of green energy from 25 cents to 3 cents. So, if you can supply green energy, plus you have electrolysers, plus you have global money, plus you have domestic willpower, India will be one of those countries which will facilitate the development of green hydrogen as the fuel of the future and then you and I will no longer be having a discussion on fossil fuels and crude oil, etc. There is going to be a massive transformation that is beginning to take place.

A: I'm not familiar. We are in arbitration in so many cases. I think I know which case you're referring to but whether we go up and appeal or not, those are not issues I'm going to answer through your good offices. Those decisions the government will take, weighing in all the points or nature of the arbitration, what is the award, which has been given? We'll study that and then we'll decide whether we go up in appeal or not.

A: I'm probably the wrong minister to be asking that question to because what you're asking about is the specific restrictions, which are going to be there on the 8, 9, and 10. The country is going to be hosting 35 people at the level of heads of state or government or more. Amitabh Kant can answer that question or S Jaishankar in more detail. But it involves issues of security access. So obviously, if you're going to tone down a little bit on your other carnival kinds of activities which we keep having, there's a beautification of the city, which everybody is welcoming, my friend Arvind Kejriwal is also trying to take a little credit out of that. So for those days of the summit, obviously, you don't want logistical and other problems. But as I said, I'm the wrong minister to ask as to what will be the restriction, all I can tell you is, the eyes of the world will be glued on the screen.

When we did Chandrayaan, I think it got 8 million views. Now we are on the moon and over the moon and this G20 is a great opportunity to showcase the progress that the country has made under the Prime Minister's leadership from 2014 to 2023. And in the process, we also add support to global efforts for some of the work that we are doing and for that to be replicated in the other developing countries in the global south. The Gates Foundation, and World Bank people tell me to replicate that on a larger scale. So these are the opportunities that you get at the G20. The Prime Minister and my other colleagues have succeeded in producing a template and it's set the bar so high. I think that's what all other G20 summits after this are likely to be compared to.

A: I am a trained diplomat, I spent 39 years in the Foreign Service. So, I don't like to anticipate an outcome because this is a meeting of heads of state and government and texts can go to the last minute. All I'm telling you is very good messaging will come out from the G20. There will be issues, and there are contentious political paragraphs, but we have the experience of dealing with them, and I'm sure Amitabh Kant and S Jaishankar, will negotiate those. However, this will be a G20, which is truly a people's presidency that the Prime Minister has done. Look at the number of cities which have had preparatory events, look at the number of subjects- it's no longer government, there is civil society in there, there are the think tanks in there and all focusing and all the more important because we are at a juncture where the multilateral system is facing challenges. The Security Council is paralysed because the permanent members are in disagreement with each other following developments at the international level. So I think the G20 is occupying much more attention than it would normally do plus the world is facing three crises, fuel, food, and fertiliser. So, the messaging out there when the heads of state and government gather and the message which will emanate from there will be not only showing India and India's contribution but also a resurgent India, the new India in the making the one which is, as I said, literally, on the moon.

A: Since you're indulging me on the BRICS as well, let me just tell you, please recall where this concept of BRIC came from. It came from certain economists on Wall Street. I remember a particular Indian lady, I think Roopa Purushottam, many years ago, worked out econometric projections as to which countries in the world were likely to register impressive rates of growth. It was intended for people on Wall Street to make investments. And originally you had BRIC- Brazil, Russia, India, and China. I was a permanent representative and Ambassador to the UN in New York when South Africa was permitted. Now whenever you set up a group, which starts with a concept, then it is developed into a small group, there will always be a desire by others to join. Why? Because it's a successful group. Now, where will this go? There is talk about currencies, there's talk about de-dollarisation- I'm new to many of these concepts. But all I will say is, please, these are very serious issues and their consideration will take place in the fullness of time. It's not that we are zigzagging from one to the other. The United States is the world's largest economy and is likely to remain so for a very long period of time. There are other economies in the BRIC original formulation, Brazil is beginning to do well, Russia has its own preoccupation, India is doing very well, and China has some problems. Being a diplomat I'm not going to say but if you look at what's happening there in terms of the real estate sector, in terms of the payment crises, etc., will their contribution continue at the level at which they were registering earlier? These are all questions. So before we do a hop step and jump and come to conclusions about BRICS, please understand we've had a very good summit from the Indian point of view. I think the flavour of that summit was the moon landing- Chandrayaan-3. But we have to tread cautiously and tread ensuring that it's both in the interest of India and plurilateral groupings and the multilateral system.