In the part 1 of the
series, I will be looking at price trends during the 17-month period of
de-regulation and the price components.
So, there is yet
another hike in the price of petrol whiles the price of the other commonly used
fuel, diesel remains un-changed. This
time, it is a 1.8 rupee per litre hike, leaving the price of petrol in Chennai
to be 72.73 rupees a litre. Petrol prices
were de-regulated in June 2010 in India and since then the prices on an average
have risen 51.74%. The average price of
petrol in India on the 25th June was 47.93 rupees per litre and on
the day the petrol price was de-regulated, there was a 3.5 rupees per litre
rise. This is a massive rise in 17
months, given the fact that India has a largely middle and lower middle class
population. During this 17 month period,
the price of diesel has increased 8.37%.
Crude Oil Price
During the same
period, the price of crude oil increased by 42.75%. The composition of Indian Crude Oil basket
represents average of Oman and Dubai for sour grades and Brent (dated) for
sweet grade in the ratio of 67.6:32.4.
The following table traces the historical price of the Indian crude
basket and the corresponding retail price variations in the 17 month period
since de-regulation.
|
Period
|
$/barrel
|
Date
of revision
|
Rupees/litre**
|
|
November 2011*
|
|
November
04, 2011
|
72.73
|
|
October 2011
|
106.11
|
|
|
|
September 2011
|
108.79
|
September
16, 2011
|
70.82
|
|
August 2011
|
106.94
|
|
|
|
July 2011
|
112.37
|
July
01, 2011
|
67.5
|
|
June 2011
|
109.85
|
|
|
|
May 2011
|
110.65
|
May
15, 2011
|
67.22
|
|
April 2011
|
118.46
|
|
|
|
March 2011
|
110.71
|
March
02, 2011
|
61.93
|
|
February 2011
|
101.62
|
|
|
|
January 2011
|
93.87
|
|
|
|
December 2010
|
89.77
|
December
16, 2010
|
60.65
|
|
November 2010
|
84.26
|
November
09, 2010
|
57.44
|
|
November
02, 2010
|
57.09
|
||
|
October 2010
|
81.11
|
|
|
|
September 2010
|
76.09
|
September
21, 2010
|
56.31
|
|
September
08, 2010
|
56.02
|
||
|
August 2010
|
75.13
|
|
|
|
July 2010
|
73.54
|
|
|
|
June 2010
|
74.33
|
June
26, 2010
|
55.92
|
|
May 2010
|
76.16
|
|
|
|
April 2010
|
84.08
|
April
01, 2010
|
52.13
|
*Average price not
available for the period
** Chennai price
The
striking feature since the petrol prices were de-regulated is that the prices
have not faithfully followed the crude oil prices. There has not been a single instance of the
retail prices having been reduced, while the
crude prices have fluctuated lower a few times.
The latest rise has been attributed to the declining Indian rupee
against the US dollar.
Petrol Price Components
So, what constitutes
the price of petrol in India? There are
a multitude of cost components that is involved in determining the retail price
of petrol.
The price of the
Indian Crude Oil basket on 2nd November 2001 as per the Petroleum
ministry website is $108.4 per barrel.
Assuming an exchange rate of 49.25, this amounts to 33.57 rupees per litre. The following table shows the various cost components
and the final retail price in Chennai.
|
Who
earns?
|
Component
|
How
much?
|
|
|
OMC
|
Base price
|
*
|
|
|
Central
government
|
Crude oil customs duty
|
50 rupees/MT as NCCD + 2500
rupees/MT as cess: 0.73 rupees/litre app.
|
Fixed
|
|
Petrol basic customs duty
|
2.5%
|
||
|
Basic cenvat duty
|
6.35 rupees/litre
|
||
|
Special additional excise duty
|
6 rupees/litre
|
||
|
Additional excise duty
|
2 rupees/litre
|
||
|
Education cess
|
0.43 rupees/litre
|
||
|
State
government
|
VAT/Sales tax
|
27% (Tamil Nadu)
|
Variable
|
|
OMC
+ Dealer
|
Transportation cost
|
**
|
|
|
Dealer
|
Dealer commission
|
1.499 rupees/litre
|
Fixed
|
* Latest base
price not available
** Transportation
cost is approximate
On an average, the
base price of the petrol is less than 50% of the final retail price. Central and state government taxes constitute
a major part. Central government earns a
fixed 14.78 rupees per liter in addition to the customs duty. It is to be noted that the state tax is a
percentage of the base price. So, the
next time there is a price rise, know that the state and the central government’s
revenue from petrol sales increase as a percentage of the taxes. While the Oil Marketing Companies, which are
essentially government enterprises, whine about losing money on petrol, it is
the government that is gaining by increased revenue at the expense of common
man.
- Vijay
Sources:
PPAC (Petroleum
Planning and Analysis Cell) – www.ppac.org.in
Indian
Oil Corporation – www.iocl.com