Thread by @ihailmyindia

Every time I post something about oil, I see the same comments “Ambani is getting rich by buying cheap Russian oil while Indians stay poor.” Let’s actually break this down properly, with info available on Google & then you can draw your own conclusion... Firstly, India have 2 types of refineries:
1. State-owned refiners: IOC, BPCL, HPCL. These supply the bulk of petrol & diesel, to Indians use.
2. Private refiners: Reliance (Ambani) &Nayara. They buy oil, refine it, and mostly export it.
So is it only Ambani buying Russian oil? No.
Nayara does the same. Even state refiners buy Russian crude for domestic supply.
Second, Does Modi govt “give oil” to Ambani? No.
1. Private refiners, directly negotiate &purchase crude from Russia, Saudi, Iraq, Iran, etc... The Govt does not buy oil &hand it to Ambani, It only owns & controls the state refiners... In fact, tomorrow if any other Indian corporate builds a big refinery, they too can import Russian, Saudi or Iranian crude. 🙄
Why does Ambani get rich then? Bcoz Reliance runs Jamnagar refinery, the biggest in the world... They ship diesel/jet fuel to Europe, Africa, US... Do those countries get cheap fuel? No, Their governments also slap VAT/excise.
Ex: In Germany, crude cost might be €0.50/litre, but taxes are €0.80/litre but final pump price €1.50..... Nayara plays the same game with its Vadinar refinery.

Now, Why don’t Indians get cheap petrol then ? Coz of TAXES.
> Base crude + refining + transport = ~₹45 per litre.
> Central excise = \~₹19.
> State VAT = \~₹20 to ~₹35 average.
> Dealer margin + cess = \~₹3–4.
> Final = \~₹100 per litre.
So even if Russian crude is cheaper, the state & central govt captures the benefit through taxes.
Reliance and Nayara can’t just sell petrol at ₹70/litre, because retail pricing is tied to state refiners. They also prefer exporting, where profits are bigger... Is this unique to India?.. Not at all. All over the world, private refiners and traders do the same:

> Valero (USA) imports crude from Mexico & Saudi, refines in Texas, and sells at US/global prices.
> Vitol & Trafigura (Europe) buy from Nigeria, Russia, Middle East, and resell/refine worldwide.
> Sinopec (China) buys from Saudi, Russia, Iran under long-term contracts.
> They all make profits when they get cheap crude. Consumers in their countries also don’t see “cheap petrol” because taxes dominate retail prices.

People keep saying “Ambani is getting rich from Russian oil while the Modi govt does nothing.” But here’s what most don’t know, India already had a mechanism to tax those extra profits.
Yes, private refiners like Reliance and Nayara made billions when Russian oil came cheap and global prices stayed high. But the same “pro-Ambani” government, as Rahul Gandhi calls it, actually brought in a windfall tax in July 2022. Whenever profits shot up due to global price spikes, the govt imposed an additional levy at one point as high as ₹23,250 per tonne of crude, plus duties on diesel, petrol, and aviation fuel exports.

This wasn’t even the first time. Back in 2008 too, when oil touched $140 a barrel, India had special levies on ONGC and Oil India to capture “super-normal” profits.

Now where does all this revenue go? People must understand with a simple example, even in a so-called deregulated era.

When crude prices shot up after the Russia-Ukraine war, private refiners made big export profits, but state-owned OMCs bled on domestic fuels like LPG. Why? Coz LPG is politically sensitive, so prices couldn’t be passed fully to consumers. This created under-recoveries of nearly ₹28,000 crore in 2022–23.

And what did the government do? It used its oil revenues and general tax kitty to announce a ₹22,000 crore one-time grant to bail them out. Without that cash injection, OMCs would have collapsed under losses.

So the revenue doesn’t just vanish into thin air, it goes into bailing out OMCs, funding subsidies, building infrastructure, and keeping the fiscal deficit from blowing up. In short, the government collects through taxes &windfall levies on one side, and then spends back part of it to stabilize state refiners and the broader economy...

Now still the government has to compensate..In 2022–23, state-owned OMCs (IOC, BPCL, HPCL) under-recoveries touched ₹28,000 crore, and the government stepped in with a ₹22,000 crore one-time grant... This year again, losses on LPG are estimated at over ₹40,000 crore, & reports say the Centre may give them ₹30–35,000 crore in subsidy.

The method has changed earlier it was hidden through oil bonds, now it’s paid directly from the budget, but the reality is the same: the government still has to bail out OMCs whenever global prices squeeze them.

The real use of saving on the oil import bill is macroeconomic stability. Since India imports about 85% of its crude in US dollars, every dollar saved means fewer dollars leaving the country. This helps slow down the rupee’s depreciation & narrows the current account deficit, making India look more stable to global investors. It also preserves foreign exchange reserves, which the RBI can then use to pay for other vital imports like defence equipment, fertilizers, or semiconductors, and to defend the rupee during volatile times. A lower import bill therefore strengthens the currency, reduces external vulnerability, and improves India’s credit profile, allowing the govt & companies to borrow at cheaper rates. In short, the savings don’t show up as cheaper petrol for consumers, but they keep the larger economy steady...