India bought Russian oil for nearly $20 billion in just seven months, but who benefits are the private companies in a catch 22-situation.
This strategic war between the western alliance of nations and Russia is a catch-22 situation where the West wants to weaken Russia’s economy so as to stop fighting against Ukraine as nearly half of Russia’s annual revenues comes from oil, making it extremely dependent on the oil trade. Russia recently welcomed India’s decision to not support G7’s price cap on Russian oil
The complicity of the oil ban is the world is dependent on Russian oil, so the war goes on where Russia uses the money from its oil to continue its war on Ukraine. In all this, India keeps buying Russian oil, but is it really benefiting India?
The Center claims it is buying cheaper Russian oil in the nation’s interests, however, for the average Indian nothing has changed and the price of petrol or diesel has remained static with a few rupees up and down, and in fact, the rates of fuel are skyrocketing at present.
The price of diesel in Delhi before the Ukrainian-Russian War started was Rs 87 and the current price has gone as high as over Rs. 99 in some states.
The Plot of the Western Nations Against Russia
The US, Canada, Australia, the United Kingdom, and 27 countries of the European Union joined in an agreement to impose a price cap on Russian oil. They have determined to not buy or provide the necessary insurance and maritime services to transport Russian oil at prices above $60 per barrel.
About half of Russia’s annual revenues come from oil, making it excessively dependent on the oil trade. An outright ban on Russian oil will result in zooming oil prices that adversely impact the whole world. So, the western bloc of nations got the idea to form a customer monopoly to reduce the prices of Russian oil with an aim to disable Russia’s ability to continue its attack in Ukraine, but still, allow Russia to sell its own to reduce the world shock of oil escalated rates.
Thus, oil from Russia would need to be transported to other nations for which, it needs maritime transportation and insurance services, which are provided almost exclusively by western nations. The western bloc devised a plan to leverage its power in the oil shipment industry to impose a maximum price at which other nations can buy oil from Russia. This means the private companies in the western countries that provide these shipment services are now tied by government diktats. This effective ‘nationalization’ of companies militates against the western dogma of private enterprise. Yet, this convoluted, complex and somewhat irrational proposal conceived by the western nations is reflective of their ‘whatever it takes attitude to impair Russia’s war in Ukraine and prevent deaths and damage.
So, who is buying Russian oil in India?
Nearly three-quarters of cheap Russian oil is bought by private refiners, Reliance Industries, and Russian-controlled Nayara Energy. These companies buy the cheaper Russian oil, refine it and sell it back at a big markup to European nations. Nearly one-third of Reliance’s crude oil purchase is now from Russia, which was only at 5 percent before the war began.
This points out the fact that public sector refiners such as Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum are getting only a small share of Russian oil while these public refiners are the ones that supply more than 90 percent of the average Indian’s fuel needs. So, the companies that purify and export to other nations take the bulk of cheaper Russian oil imports vis-à-vis companies that supply fuel to the common man. Thus, the average Indian has not been able to reap the benefits of cheaper Russian oil imports while private refiners are reaping record profits.
Indians are getting the whiff of this and calling it a fake nationalism that caters to certain private companies. In all this, it is surprising to find out that India has paid Russia nearly $20 billion for oil in just seven months, more than what it paid in the last ten years combined according to sources. All this has only reaped more heightened profits from a few Indian companies.
As India has been a huge buyer of Russian oil ever since the war in Ukraine started in fact choosing Russia as its biggest supplier of oil, where India buys 10 times more oil than it did before the war, this is being called out.
According to the Directorate General of Commercial Intelligence and Statistics, Ministry of Commerce and Industry, India has paid Russia nearly $20 billion for oil in just seven months from April to October, more than what it paid in the last ten years combined.
A cat was let out of the bag during a CNN interview with the Minister of Petroleum and Natural Gas Hardeep Puri who let out, ‘I buy Russian oil’, implying the government or the sovereign and when pushed back by the interviewer, he confessed that ‘private companies buy Russian oil’.
The government also levied a windfall gains tax on private companies that allegedly made huge export yields from crude oil refining. But a convoluted tax on a share of profit does not explain why these companies profited at the expense of the sovereign in the first place.
All this does not benefit billions of Indians as petrol and diesel are soaring higher while the government is only gaining a few thousand crores in tax revenues. It is interesting to note that these two private companies did not buy much Russian crude before the war and suddenly pounced on three-quarters of it at a discounted price only to export it to Europe, all for their own gains while billions of Indians are still paying through their noses for fuel. In fact, India is going through this.
This purchase was not necessary as only two private companies benefit from it and it does not help billions of Indians when the cost of fuel is only skyrocketing. In fact, this trade is cruel as it actually enables a bloody gory war where thousands of innocent civilians have been slaughtered. These private companies couldn’t care less and are minting money looking on with indifference at the graves of over six thousand Ukrainian civilians.