Crude oil import bill jumps over 190% in Q1

NEW DELHI: India’s crude oil import bill soared nearly threefold in the first quarter of the fiscal (Q1FY22) fuelled by a sharp rise in global oil prices, further raising concerns for policymakers.

The fuel import bill totalled about $24.7 billion in the three months ended June 30, compared with $8.5 billion a year earlier, according to official data. Volume growth was, however, modest at 14.7% in the June quarter at 51.4 million tonnes.

The oil import bill has risen sharply although domestic fuel consumption still lags pre-covid levels. With global oil prices unlikely to fall sharply in the near future, and domestic fuel consumption on the rise in line with easing of Covid-related curbs and renewed economic activity, the oil import bill is expected to exceed $100 billion this fiscal year through March, two officials aware of the development said requesting anonymity.

India had imported a little over 198 million tonnes of crude worth $62.7 billion in 2020-21, according to the Petroleum Planning and Analysis Cell (PPAC), the official data keeper of the petroleum ministry.

India, which imports more than 80% of the crude oil it processes, saw domestic consumption fall in the June quarter due to partial lockdowns in various states to contain the spread of the second wave of the pandemic.

According to PPAC, domestic consumption of petroleum products fell 9.28% sequentially in April to 17.03 million tonnes. It dropped further to 15.12 million tonnes in May before recovering partially to 16.33 million tonnes in June 2021. The first two months of this fiscal were the worst affected by the second wave.

While declaring state-run Indian Oil Corporation’s (IOC) first quarter results, chairman SM Vaidya said last week that petrol demand had already reached the pre-pandemic level as people preferred personal vehicles over public transport, but growth in diesel consumption was still low. He expects diesel sales to reach pre-pandemic levels by Diwali in November provided there are no further lockdowns due to a potential third wave.

S.C. Sharma, an energy expert and former officer on special duty at the erstwhile Planning Commission said the spike in India’s import bill in Q1FY22 is due to high crude oil prices. As against $44.82 per barrel average import price in FY21, oil import prices averaged $67.44 per barrel in Q1FY22, he said. Average oil import price has further jumped to $73.54 a barrel in July, according to PPAC.

Crude prices continue to stay volatile and are above $70 per barrel.