Government's "customer-first" strategy steered India through unprecedented oil crisis, says former HPCL chief
New Delhi, June 29
A customer-first policy and a multi-pronged strategy successfully steered India through an unprecedented global oil crisis, ensuring stable fuel supplies despite massive international disruptions, according to Mukesh Kumar Surana, former Chairman and Managing Director of Hindustan Petroleum Corporation Limited.
Speaking to ANI on Monday, Surana noted that the conflict heavily impacted the Strait of Hormuz, a vital transit route handling 25 per cent of global oil and gas supplies, bringing the movement of nearly 200 daily vessels to a near standstill.
The disruption posed an immediate challenge for India, which relies on imports to meet 90 per cent of its oil, liquefied petroleum gas (LPG), and liquefied natural gas (LNG) requirements, with Middle Eastern nations serving as primary suppliers due to regional proximity and freight advantages.
"If we see the whole crisis, it was a bit unprecedented in terms of the longevity of the disruption and the extent of disruptions," Surana said. "And in that situation, India not only had very effectively managed it, but there was a multi-pronged approach which worked for it."
To mitigate supply shocks, the government prioritized the domestic sector by redirecting resources from industrial use. Authorities instructed domestic refineries to route propane and butane streams toward LPG production instead of petrochemical manufacturing.
"The government took a view that the customer first policy that the consumer needs to be protected. And it was a result of multiple actions," he said.
Surana mentioned that the government increased the mandatory cooling period between cylinder bookings to prevent hoarding, effectively reducing daily consumption from 90,000 tons to 75,000 tons. Industrial consumers, including fertilizer and chemical units, saw supply curbs of 20 to 30 per cent, while commercial establishments were encouraged to transition to city piped natural gas (PNG) networks and alternative fuels.
Surana highlighted that India successfully diversified its procurement by purchasing crude oil and LPG from non-traditional suppliers, including the United States, African nations, Armenia, and Australia, while leveraging its existing relationships with 41 countries.
"Even with diplomatic independence to the extent that there were a lot of claimants for not buying Russian oil. India did buy Russian oil and a substantial quantity of it. Russia has been a strategic partner of India," Surana added. "And that is how the common man never felt the situation where they don't have cooking fuel in their kitchen, they don't have petrol in their cars."
The intervention also protected domestic consumers from extreme global price volatility. Surana highlighted that while the Indian crude basket experienced a 65 per cent cost spike, with peak prices hitting USD 126 per barrel compared to pre-war levels of USD 70, retail pump prices in India increased by only 7 to 10 per cent.
This minimal adjustment was implemented in a calibrated manner nearly two months after global prices began escalating.
To absorb the financial shock, the central government reduced the excise duty on petrol by Rs 10 and dropped the excise duty on diesel to nearly nil. Additionally, the government absorbed a major fiscal gap on LPG cylinders; While international market rates justified a retail price of over Rs 1,600 per cylinder, they were sold to regular consumers at Rs 942 rupees and to Pradhan Mantri Ujjwala Yojana (PMUY) beneficiaries at Rs 642 rupees.
State-run oil marketing companies further cushioned the impact by holding retail rates steady despite absorbing significant under-recoveries.
Surana emphasized that active diplomatic negotiations and back-channel talks proved crucial during the conflict, allowing 10 to 12 Indian crude and LPG vessels to safely navigate the Strait of Hormuz.
"The relationship with other countries, we were buying both from Russia as well as America. And even when there were sanctions on Russia, we did get the waiver for the sanctions so that we can buy more freely," Surana added. "Diplomatic relations were extremely important and it is very interesting to note how it was negotiated through a depth diplomatic handling of that."
— ANI
Reader Comments
While I appreciate the effort to protect consumers, I wonder about the long-term costs. Subsidizing LPG and excise cuts must have strained government finances. And what about the environmental impact of buying more fossil fuels? Hope we also invest in renewables alongside this.
As someone who runs a small chemical business, I felt the 20-30% supply cuts for industrial consumers. But honestly, I'd rather have that than see families unable to cook food. The customer-first approach really worked - my mom never faced any LPG shortage at home. Well done, government!
The diplomatic angle is fascinating - navigating the Strait of Hormuz with 10-12 vessels, buying from Russia despite sanctions, relationships with 41 countries. This isn't just about fuel, it's about India's growing global stature. We're not taking sides, we're taking care of our people. 👏
I remember those days - petrol prices were stable while everything else was going crazy globally. The cooling period between cylinder bookings was annoying but it made sense. Imagine if we hadn't acted - could have been a disaster. Sometimes government intervention is necessary, and this was a textbook example.
Proud moment for India but let's not forget the OMCs who absorbed under-recoveries. And the Rs 10 excise cut on petrol was later restored - so the common man eventually paid more. Still, better than the alternative. Hope we learn from this and build more strategic reserves.
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