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Old 29th May 2012, 09:37   #181
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

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Originally Posted by Aroy View Post
I cannot find the sources, but here is how oil and gas imports are treated in bilateral agreement
. A quantity band is agreed upon.
. The price band is also fixed. Barring unforeseen circumstances both the volume and the price are adhered to.
. War, Sanctions and Natural Calamities are the only way to wriggle out of the agreement.

I had read that most of Indian crude is obtained at fixed long term prices, hence unaffected by price fluctuations. Where the current spot prices come to play is in fixing notional profit/loss by Indian companies with respect to the price paid by the Government for the crude and gas, and in extra quantities required in case of increase of demand.
Yes, the Govt of India buys crude at fixed long-term prices and sells it to Indian consumers at spot prices. They are criminals wearing khadar, but criminal nonetheless.
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Old 29th May 2012, 10:47   #182
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

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Yes, the Govt of India buys crude at fixed long-term prices and sells it to Indian consumers at spot prices. They are criminals wearing khadar, but criminal nonetheless.
Hello Lurker,

Yes. That fact was very surprising for me too - That Government is buying Crude at fixed long term prices but retail sales price is decided by current spot prices.

I believe probably this is the very reason that Oil Marketing Companies are crying for losses everytime & at the end of the Quarter they post robust Sales & Profit Figures. Yes this is criminal & daylight robbery, that is why we have threads like this here.

But one thing I don't understand, is why is no Auditor or Financial Expert speaking against this? I feel CAG should bring out this fact just like it exposed the scams in Common Wealth Games & Telecom Licences.

Also I feel next episode of Satyamev Jayate should be on Daylight Robbery by Government & Oil Marketing Companies in India.

Thanks,
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Old 29th May 2012, 12:33   #183
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

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IOC announced net-profit of Rs 12,670.43 crore for the quarter ended March 31, 2012, a 224 percent YoY increase from Rs 3,905.16 crore in the year-ago period.
Please read this:

The Truth behind Indian Oil Corporation’s ‘Profits’

The author is my sister
Rajan
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Old 30th May 2012, 11:17   #184
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

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Originally Posted by PatchyBoy View Post
Please read this:

The Truth behind Indian Oil Corporation’s ‘Profits’

The author is my sister
Rajan
If this is indeed true, then Govt,
* Gives subsidy to oil companies
* Collects dividends from oil companies (Govt has around 78% stake in IOC)
Its like paying somebody to make a profit and later collect part of the profit.

Oil companies,
* Sell petrol at above normal rate, with extra duty (excess duty goes to Govt).
* Sell diesel at normal rate
* Sell LPG & kerosene at below normal rate (collect subsidy from Govt to make up for the loss).

(* normal rate means the rate which covers cost & normal margin).
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Old 31st May 2012, 14:01   #185
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

A media leak says AP now plans to reduce VAT on petrol from 33 % to 30%. This magnanimousgesture may benefit the consumer from Rs.1.5 to Rs.1.8 per litre.

But Chief Electoral Officer threw spanner in the works as there are by elections on June 12 th for 18 Assembly constituencies and one Parliamentary Constituency.


All the 'losses' the Government claims are notional. That is why the companies post profit.

Can a citizen RTI the OMCs for the details?

Last edited by simplyself : 31st May 2012 at 14:03.
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Old 31st May 2012, 15:05   #186
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

While there is nothing much we can do about it than crib & continue to pay throught the nose, i have to admit the title really captures the essence of the topic "Fuel Pricing in India. Detailed Robbery Analysis" Love it!

When i think about it, we pay tax in our salary (to the tune of 25 to 30%) every month, then we pay service tax / VAT of 12% for every item we purchase (or) eat outside, On top of VAT there is education cess / corruption cess etc, then comes the excise duty for the vehicle plus the Fuel cost (plus of course TAX), Toll fees for using the road (Forget the lifetime road tax paid, that is not applicable for the highway) and the list goes on.....

Net net we end up spending only about 50-60% of the money we earn on the products while the rest of money goes in some form of Tax only.

Last edited by urajkumar : 31st May 2012 at 15:08.
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Old 1st June 2012, 00:22   #187
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

@urajkumar: actually if you calculate properly, we pay about 50-60% as taxes and this is not considering at source.
Ex- if you consider a car, you pay taxes and excise on the iron ore, Latex and other raw materials. plus at every stage of processing and at the Ex showroom and at on-road. Thus about 75% of the money you pay is for taxes. No wonder cars are much cheaper in countries like the US.
@simplyself: you cannot RTI the OMCs as you will then be fed a lot of B***S***. Numbers can be manipulated to show anything. In our country, owning a Luna or TVS 50 would automatically put you into the affluent bracket. And there is no harm taxing the rich. The poor who live off Rs. 21.00/- per day do not need petrol.
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Old 12th November 2014, 17:14   #188
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Very relevant thread. Now Brent crude is at $77.5 per barrel . It translates to INR 30 per liter of crude oil. Even if we put a mark up of 80% in refining, all Central, State taxes, transportation, dealer margin, evoporation loss, insurance, 30*1.8 comes to INR 54. But nowhere in India, petrol is sold at 54! Goa comes close. Petrol at INR 60 in Goa.
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Old 12th November 2014, 17:45   #189
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Crude (brent) has dropped by 30% since June, so petrol prices should have dropped by the same amount since petrol was market pricing even in June. Petrol retail prices have dropped by only 12 to 14%. If this is not day light robbery i don't know what is and the funny thing is that all the retailers (PSU ones) have almost the same price and nobody does anything. If this is not cartelisation i don't know what is. No CCI investigation and no intervention by any courts. I hope somebody files a PIL
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Old 13th November 2014, 11:00   #190
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

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If this is not cartelisation i don't know what is. No CCI investigation and no intervention by any courts. I hope somebody files a PIL
You are right.
This is cartelling.
This is monopoly.
This is a looting behaviour.

But you must understand that India has NEVER ever claimed to be truly capitalistic free market promoting nation. In fact if you remember our constitution, the preamble clearly states:

WE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a SOVEREIGN SOCIALIST SECULAR DEMOCRATIC REPUBLIC

The point is that all PSUs are owned by Govt. So they operate on principles of socialism.
But all oil companies are owned by Govt. ... ?
No.
India has allowed private players to operate refineries since quite some time.

Similarly we had a flurry of retailers like Reliance, Essar and Shell who opened their shops alongside the roads. These are not PSUs. The Govt has very limited control over their prices (of course it can still play a spoil sport and levy additional taxes and duties only on these companies).

If it was truly profitable to sell at Rs 54 or whatever numbers we may think of - the private players will jump in. (forcing the PSUs to also revise their pricing)

Last edited by alpha1 : 13th November 2014 at 11:04.
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Old 14th January 2015, 14:45   #191
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

The last pricing of petrol as of 2 Jan 2015 is well explained on BPCL website.

The avg price plus freight plus internal margins was 33.72 INR/litre from OMC's with 6.47 being the margin of OMC.

The selling price is 61.35.

Taxes on the same are 25.63 and the margins in the trade are 2.03

This just shows that taxes at 25.63 are roughly equal to the landed cost of petrol(post refining crude) at 27.25.


http://www.bharatpetroleum.co.in/Adm...Jan%202015.pdf

The government needs to reduce the taxation to boost economic growth.
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Old 14th January 2015, 15:26   #192
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

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The avg price plus freight plus internal margins was 33.72 INR/litre from OMC's with 6.47 being the margin of OMC.
That was when 1 barrel was $67 & 1 $ was Rs 63.2. Today 1 barrel is approx 46 & $ is Rs 62.2. So the price is Rs 17.9. If keep the margin as 6.47 then price is 24.37 INR/litre. But sale is price still Rs 61.37.
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Old 14th January 2015, 15:47   #193
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

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That was when 1 barrel was $67 & 1 $ was Rs 63.2. Today 1 barrel is approx 46 & $ is Rs 62.2. So the price is Rs 17.9. If keep the margin as 6.47 then price is 24.37 INR/litre. But sale is price still Rs 61.37.
There is a lag in fuel pricing and the price has fallen quick.

I don't know the exact timelines but here's a guess: The fuel you buy today was probably bought at november end prices, delivered in December and reached your pump last week after refining.

e.g http://in.reuters.com/article/2010/0...45198220100106
Jan 7 report - delivery in 10/11 Feb, delivered to customers not before end Feb etc.

Spare a thought for the oil cos - the value of the oil would've fallen in the month from the time they bought it to the time it got delivered!

Only in early nov prices were 75-80$/barrel. Imagine crude bought at $80/barrel on 20th Nov - it would only now be reaching customers. They're buying $80 linked petrol but are seeing $47 prices and feeling cheated. This is just a lag in the market and that's how it is.
http://www.investing.com/commodities...istorical-data
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Old 14th January 2015, 16:00   #194
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

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......They're buying $80 linked petrol but are seeing $47 prices and feeling cheated. This is just a lag in the market and that's how it is........
Don't the OMCs buy crude at long-term contracted rates and not at 'current' per barrel rates? I've seen this point mentioned multiple times in the whole deregulation debate, so I'm not sure the 'loss' theory holds good, except maybe on the OMC's audit records.

Even if the 'crude to pump' cycle you allude to is accurate, it works both ways and should cancel itself out. Govt will be selling fuel refined from cheaply bought crude at jacked-up prices when a correction happens, thus gains balancing losses.
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Old 14th January 2015, 16:14   #195
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

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Don't the OMCs buy crude at long-term contracted rates and not at 'current' per barrel rates? I've seen this point mentioned multiple times in the whole deregulation debate, so I'm not sure the 'loss' theory holds good, except maybe on the OMC's audit records.

Even if the 'crude to pump' cycle you allude to is accurate, it works both ways and should cancel itself out. Govt will be selling fuel refined from cheaply bought crude at jacked-up prices when a correction happens, thus gains balancing losses.
It is a real loss - buying at $80, selling at $47 linked prices, not just an audit figure!

But yes, indeed they should quickly correct retail prices within the next fortnight to start tracking the fall in global prices and in the future, delay the lag in increases as well. The principle should (and does, AFAIK) work both ways.
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