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are fuel (petrol/diesel) prices decided in India? - Quora

Ho are fuel (petrol/diesel) prices decided in

India?

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Why does each city (even in same state) have a different price-point?
Refer: http://www.publicinfopath.com/pe...
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Diesel Pricing in India

Le a a
e ha Die e i bei g i
ed b IOC (I dia Oi C
ai )
f
ac
a i Sa di A abia. The ice a hich hi Die e i
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a
de i e Die e a a ea b
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C&F Price = FOB Price + Ocean Freight

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d i g

O he i
ed c de i , he G
f I dia i
D . I i 2.5 % of the C&F Price i.e. if IOC
& F P ice i R . 100 e Li e he C
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Cha ge a d C
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IPP = C&F Price + Import Charges + Custom Dut

O e
e e
bec e
h e i i g he e hich i EPP, i.e. E port
Parit Price. I ba ica i a h
he ica e . I i e a
he FOB
price ea i ed b IOC if i WOULD HAVE e
ed i Die e
i e ai a a e
I I dia he

eigh ed a e age f IPP a d EPP i

.quora.com/Ho -are-fuel-petrol-diesel-prices-decided-in-India

ed. Th

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1/20/15

Ho

are fuel (petrol/diesel) prices decided in India? - Quora

TPP, . . Trade Parit Price. I

:

TPP = 0.8

Sea ch f

IPP + 0.2

EPP

P
/D
/K
RTP, . . Refiner Transfer Price
OMC (O M
C
) R
D
D
TPP. I

eRTP
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, TPP
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D
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,
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/R

. OMC
TDP . . T

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.
P

.I

TDP = RTP + Inland Freight + Marketing Cost

OMC
TDP. T

N
D
Dut , S
G
L

D
Depot Price.
.

less

.H ,C
G
Value Added Ta (VAT)
.

E cise

T
H

,
,

L '

-I
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FOB Price of Diesel - $ 124 / Barrel

Ocean Freight - $ 2 / Barrel
C&F Price (1 + 2) - $ 126 / Barrel = R . 48 / Li e
(1 Barrel = 159 Litres and $1 = Rs 62)
Import Charges - Rs. 0.5 / Lt
Custom dut - Rs. 1.5 / Lt
IPP (3 + 4 + 5) - R . 50 / L
EPP - Rs. 48 / Lt
TPP - Rs. 49 / Lt
RTP - Rs. 49 / Lt
Inland Freight + Marketing Cost of OMC - Rs. 3 / Lt
.quora.com/Ho -are-fuel-petrol-diesel-prices-decided-in-India

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are fuel (petrol/diesel) prices decided in India? - Quora

Total Desired Price (8 + 10) - Rs. 52 / Lt

Subsidy by Central Govt. - Rs.10/Lt
Depot Price - R . 42 / L
Excise Duty + VAT + Dealer Commission - Rs. 10 / Lt
Up ote 2.2

Do n ote Comments 28+

Retail Price (13 + 14) - R . 52 / L

Let s find out the answers of some Basic QuestionsWhat is Under Recovery?
Under Recovery is the difference between Total Desired Price & Depot price.
Mathematically:
Under Recovery = TDP

Depot price

Are Under Recovery and Loss are similar terms?

OMCs are selling Diesel at Rs. 10/L loss. They get the same amount back,
partly through Govt. subsidies and partly through discounts from oil suppliers
(ONGC and OIL). Notionally, OMCs dont incur any losses but the delay in
repayment of subsidies by Govt. means OMCs have to borrow money from the
market and that entails a heavy Interest cost.
Central and State Govt. are taking a big amount as taxes but the subsidy bill is
footed by Central Govt. only. Essentially, the subsidy bill is being paid by the
taxes you are paying to the Central Govt.
Hence, Under-Recovery and Loss are not the same terms.
What is presently used in India EPP/ IPP/ TPP?
Presently for the pricing of diesel TPP is used.
Why Finance Ministry is insisting on using EPP?
From the above table it is clear that if EPP is used instead of TPP, then TDP
will become 51 instead of 52. Hence Under-Recovery will reduce by Rs.1/L. So,
Govt. will have to give lesser subsidy to OMCs. Therefore, Govt. deficit will
come down.
Why OMCs and Petroleum Ministry are insisting on using TPP?
It is clear from the above answer that if EPP is used instead of TPP than OMCs
will get less subsidy from Central Govt. But their expenditure will remain
exactly same as earlier. Hence, their financial health will deteriorate.
REFERENCESWelcome to Ministry of Petroleum & Natural Gas
IndianOil : Iocl.com
India News | Latest News Headlines, Finacial News, Business News &
Market Analysis on Indian Economy - Business Standard News
Updated 5 Sep, 2014.

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are fuel (petrol/diesel) prices decided in India? - Quora

Mo e An

I he e an

Belo . Related Questions

ea on fo fi ing pe ol and die el p ice in pai e?

Ho do he Oil Ma ke ing Companie decide he Pe ol and Die el p ice in

India?
F el p ice in India o e -infla ed -

h o m h?

Anonymous
8 p o e b Sai K i hna, P a e h Pande , Bob Chen, (mo e)

Petrol and Diesel prices are calculated on a concept called trade parit prices.
Trade parit price is calculated using e port price and import prices. Based on
this C&F price ( Cost & Freight ) at various port locations. Quotes used are of
previous fortnight. After that various dut components and dealer margin.
Different cit have different prices due to variable dut structure at various
locations.
W i en 26 A g, 2014.

Si emap # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Up ote

1 An

Abo - Ca ee - P i ac - Te m
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e Collap ed

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