New Petrol Price – Much of a Pain?

About 38 %  or Rs 26.22 -- in the petrol price of Rs 68.64 a litre in Delhi (in many other Indian cities the price of petrol is much higher) is because of central and state government taxes.

State-owned oil firms had last week hiked petrol price by Rs 1.80 a litre, the fifth increase this year, as oil imports became costlier due to fall in rupee value.

The new rate is based on a basic price of petrol, without including any taxes, refining cost or margin, of Rs 41.38 per litre, oil company officials said.

The retail selling price is calculated by adding customs duty, central excise rates and VAT to the basic price which is nothing by the average of international oil rate.

On Rs 41.38 a litre base price, a customs duty of 2.5 per cent or Rs 1.04 per litre is levied.
Beyond this, the central government levies Rs 6.35 per litre basic Cenvat duty, Rs 6 per litre special additional excise duty and Rs 2 per litre additional excise duty towards highway cess.

The excise duty, after including education cess at the rate of 3% totals up to Rs 14.78 per litre.
However, VAT, which in Delhi is at 20 per cent, rises with every increase. Earlier, VAT on petrol was Rs 10.62 per litre, but after the hike, it totals to Rs 11.44 a litre.

In the case of diesel, the total taxes account for only Rs 7.66 of the retail price of Rs 41.29 in Delhi. The taxes include Rs 0.76 in customs duty, Rs 2.06 in excise duty and Rs 4.84 state VAT.
There is no central excise duty on diesel apart from the Rs 2 per litre cess for highway construction. Custom duty is 2.5 per cent.

State-run Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum are losing Rs 333 crore (Rs 3.33 billion) per day on selling diesel, LPG and kerosene below cost, officials said.

Petrol prices have risen by 33 per cent since they were freed from government control in June last year. The price of petrol in Delhi was Rs 51.43 a litre when the government decontrolled the fuel on June 26, 2010. Today, it costs Rs 63.70 a litre.

Source – http://www.rediff.com/business/slide-show
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Petrol prices likely to increase by Rs.1.82 !!

India again encounters a hike in petrol prices by Rs. 1.82 a litre after a recent hike in petrol by Rs. 3.14 a litre on 16^{th Sep} 2011.

Though the pricing of petrol was freed from government controls in June last year, state-owned oil firms 'informally' take directions from the oil ministry. It remains to be seen if the government will concede to the demand of oil companies just before the winter session of Parliament.

State-owned oil companies Indian Oil, Hindustan Petroleum and Bharat Petroleum last hiked petrol prices by Rs 3.14 a litre on September 16 when the rupee was ruling at about 48 to one US dollar. The local currency has depreciated further and is now trading at over 49 against the American unit.

Crude oil is hovering at around $108 per barrel in international markets. At current exchange rate, petrol price of Rs 66.84 per litre in Delhi corresponds to about $102 per barrel equivalent of crude oil price. The loss on petrol at present is Rs 1.50 per litre and after including local levies; the desired increase in retail prices is Rs 1.82 per litre.


An official from the Oil ministry said, “It may happen. We will see."

Not Such a Good News - Petrol Prices To Rise!

The OMCs are also expected to increase the price of aviation turbine fuel by around Rs 1,250 a kilolitre from the current Rs 56,260 a kl in Delhi.

The weakening rupee and firm international petroleum product prices have expanded the revenue losses of OMCs.

The loss on diesel would also increase by around Rs 1.25 a litre to nearly Rs 6 in the second fortnight of September.

The government had decontrolled petrol prices in June 2010 but has been indirectly exercising control.

The previous rise in petrol was done on May 15, when companies raised prices by Rs 5 a litre, though they were actually losing Rs 10 a litre.

On the same day, it also removed  5%customs duty on diesel and crude oil and raised the prices of diesel, kerosene and liquefied petroleum gas.

Currently, the PMCs -- Indian Oil, Bharat Petroleum and Hindustan Petroleum incur an under-recovery or revenue loss of Rs 4.57 on a litre of diesel.

These companies, which purchase crude oil at market rates, are required to sell diesel, kerosene and LPG at government-set prices, resulting in losses.

All the three government-owned companies incurred a heavy loss in the April-June quarter on heavy under-recovery that was not fully compensated by the government.

Oil companies calculate their under-recovery or over-recovery of a product based on its trade parity (80 per cent import price weight and 20 per cent export price weight) for the previous fortnight.

The price of ATF, 40 per cent of the operating cost for airlines, are already around 40 per cent higher compared to last year's corresponding price.

The decline, a relief, comes after a gap of six weeks during which prices moved up thrice. The rupee has averaged Rs 46.46 so far in September against the dollar, higher than the Rs 44.42 in July and Rs 45.32 in August.

The price of the Indian basket of crude oil, that averaged $107.24 a barrel in the last fortnight of August, has averaged well over $111 so far in the current fortnight.

Source: http://www.rediff.com/business/slide-show/slide
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