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Old 9th November 2011, 12:10   #106
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

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Originally Posted by phamilyman View Post
Considering a very high % of transportation fuel consumed in India is for individual discretionary use (yes, we can all leave our individual cars/bikes and commute by buses - so its not as essential a business as FCI imho) - even by your logic they deserve profits.
People deserve clean and efficient public transport - metro rail, buses, autos and taxis working well in combination. The last two for last mile connectivity.

The quality (service availability, cleanliness and staff behaviour) of most public transport leaves much to be desired. If the Government does more to improve the integrated public transport with all the revenue being raised from the fuel and vehicle taxes, the money can be considered well spent.

Two problems of Indian roads needing urgent attention : 1. Quality of fuel 2. Total Anarchy on the Indian roads - with absolutely no respect for traffic rules.
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Old 9th November 2011, 12:29   #107
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

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Originally Posted by heavy_foot View Post
Need of the hour is to having a proper pricing policy for Diesel. The subsidy to all Diesel users cannot go on for ever. Right now a huge percent of premium diesel car owners are enjoying subsidised fuel even when they do not deserve the subsidiary. Implementing a different pricing policy for diffirent types of diesel users is going to be difficult. So they can probarbly tax private Diesel car owners additionally.
I believe the %age of diesel used by private cars is 15.4%. Now this is data that I find hard to believe. An average private diesel car is driven ~60 km a day, about 4 L/day. An average taxi runs 500km/ day, about 50L and an average truck runs 600km, about 300L and an average bus runs about 400 km, about 100L. Private to commercial vehicles is 4:1.
I have no idea how much the armed forces and railways spend, but I always thought the Luxury cars must consume <1% of diesel in India and not 15.4%.
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Old 9th November 2011, 12:50   #108
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

The problem is with the govt. let the oil companies alone. Its retarded to keep the selling prices of fuel fixed and fixing the price for petroleum companies to sell at. The govt does not want the taxes to vary much. Since oil price fluctuates every day, the oil companies have no flexibility in pricing.
Since the whole thing is absurd, they could have kept fuels outside of state tax limits. But then, states will have to levy varying taxes depending on whether they can blackmail the central govt and get financial packages by supporting or being part of govts.
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Old 9th November 2011, 13:11   #109
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

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We need to move on from our habit of assuming that the folks in govt or govt cos are a bunch of dithering idiots and we on the internet know-it-all.
Actually, government-bashing is a common theme running through most of such threads on the forum. Because most people will see what they want to see! Wonder why we folks are so keen on seeing our own elected representatives in bad light all the time!

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PS: Yes I hate this situation and the price rise it brings - I'm just constantly trying to drill some facts and rationality into the discussion, nothing else.
Thanks for the efforts mate! I too would have contributed something had the government been listening on to us to take some perspective while fixing fuel pricing policy!

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...but nobody seems interested in letting go the favourite whipping boy of the country, the government. Taking inspiration a tweet by junior Bachchan, the guy who has a solution to all the problems, are sitting at home in front of a computer and typing away.
Well said!

A suggestion to mods, all such "Policy Analysis and Prescription" type threads for fuel pricing ought to be in "shifting gears" section as they hardly add any value from true "automotive" perspective.
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Old 9th November 2011, 13:51   #110
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

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Originally Posted by wildsdi5530 View Post
I always thought the Luxury cars must consume <1% of diesel in India and not 15.4%.
Even if it is just 0.001%, it should not be subsidized. A carpenter or electrician filling his TVS-50 at a pump should not subsidize the fuel of the Merc right next to him.
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Old 9th November 2011, 14:17   #111
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

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Why would Shell want to do so? Shell is perceived to offer better fuel and has got a consistent service. So, there are people who are buying from them any day. As I mentioned before, there is no alternative for the customer.

Ps: the price difference is a few paise, not 2-3 rs.



As far as I know, Reliance is supplying the retailers now.

The point I'm making is shell is just marginally cheaper or marginally expensive when compared to govt oil retailers, depending on the global crude oil prices. When petrol was not de-regulated, shell's prices were far higher than the govt PSUs. At least 5-7 rs difference.

And reliance has invested crores in opening massive fuel pumps and they have shut them down! If reliance can match govt prices or even if they were to price them 1 or 2 rs higher they would have reopened these outlets. But they have not! This is also partially due to the fact that pvt companies can never compete with govt companies in diesel and that is why Shell's diesel price is atleast 7-10 rs more than govt firms!

My argument is that the govt companies are not raking in profits as we perceive it to be. Some comments that we are being taken for a ride seem farfetched. And neither are they making any losses { at least overall}, since under recovery seems to be more of an profit opportunity lost rather than actual loss incurred.
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Old 9th November 2011, 14:25   #112
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

I was in touch with a senior official from Shell last week. He said that Shell still makes a loss per liter of petrol it sells. In India the concept of differentiated pricing for fuel has not really kicked in in its true sense. For eg: In Hongkong, they can sell fuel at a slightly higher rate than other providers because of the better quality of fuel and better service. They do not have to suffer losses on account of the govt subsidising taxes. FYI, they have license to operate 2000 fuel pumps in India, out of which roughly only 180 have been operational now. Reason: More pumps= sales = more losses. Only when the taxes are lowered will the private players be able to compete against the Govt providers. I was told that if the taxes are nullified, they can sell at close to 50Rs. per liter and make a small profit.
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Old 9th November 2011, 15:00   #113
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

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Originally Posted by antz.bin View Post
As an example, countries where they use their own domestic crude 100%, the fuel prices are as follows.

Venezuela : INR 1.82/liter
Kuwait : INR 12.15/liter
Saudi Arabia : INR 11.02/liter
Egypt : INR 8.33/liter
Man, would love to migrate to venezuela, even Egypt would do. Are you serious about these prices, where did you get them ?




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Originally Posted by Gansan View Post
Everyone owns one and a cell phone. The neighborhood electrician, plumber, carpenter and mason included! Their livelihood depends on it!
Quote:
Originally Posted by Gansan View Post
Even if it is just 0.001%, it should not be subsidized. A carpenter or electrician filling his TVS-50 at a pump should not subsidize the fuel of the Merc right next to him.
Carpenters/Electricians will not come under the common man, their incomes are huge, just because they ride a TVS 50 does not make them any less than the Alto/Nano owner. Have you done any work in your house lately ?
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Old 9th November 2011, 15:15   #114
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

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Originally Posted by esteem_lover View Post
Carpenters/Electricians will not come under the common man, their incomes are huge, just because they ride a TVS 50 does not make them any less than the Alto/Nano owner. Have you done any work in your house lately ?
I don't agree with your view but even assuming it is correct, should they subsidize the Diesel for private cars?
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Old 9th November 2011, 15:17   #115
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

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Originally Posted by hrman View Post
I was told that if the taxes are nullified, they can sell at close to 50Rs. per liter and make a small profit.
That is the cruz of the problem - petrol is obscenely taxed and diesel (a close substitute of petrol) is hardly taxed.
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Old 9th November 2011, 15:23   #116
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

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Originally Posted by hrman View Post
I was told that if the taxes are nullified, they can sell at close to 50Rs. per liter and make a small profit.
Taxes being nullified is not even a remotest of possibility. Government is not even deliberating on lowering of taxes at all. They say, if they lower the taxes they will not be able to meet the social commitments through NREGA program(indirectly meaning: how can we let go of the cash cow)
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Originally Posted by motorworks View Post
The point I'm making is shell is just marginally cheaper or marginally expensive when compared to govt oil retailers, depending on the global crude oil prices.
I would not call a Rs. 2/-difference marginal.
When I last fille up at shell it was Rs. 76.75/- a litre when PSU pump price was 74.25/-
Last week when price was increase by 1.82/- per litre of petrol, Shell also chose to increase it's cost by 2/-. Yesterday I refilled again at shell and their price was 78.74/- for a litre.
I was hoping that Shell being Pvt. company will have it's efficiency to price the petrol lowe or in par with PSU pumps. But I was wrong. I don't understand why Shell chose to follow PSU pumps and raised prices after them??
I am not sure about this logic, but does govt. compel Pvt. companies to keep their prices higher than the PSU pumps? Any guesses?
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Old 9th November 2011, 15:25   #117
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Well as per my opinion Govt is to be squarly blamed for the mess. Consider the following aspects of our petroleum policy.

Diesel Subsidy
- the biggest users of diesel are generators which run mobile towers and they contribute about 15% of diesel consumption.

- agricultural use (tubewells, farm equipment)

- the other big user is Indian Railways

- then comes public transportation & road freight

- last is the consumption by private vehicles

Government cleary wants to subsidize a few sections : public transport, freight & agricultural sector but because of stupid policies and pussy-footing it ends up subsidizing private vehicles and private enterprise. Increasingly cruder petroleum products like furnace oil is becoming expensive than diesel so many companies have begun to use diesel rather than furnace oil. So the more diesel is subsidized the worse it will become for the Government.

The best form of subsidy is to give direct benefits to deserving segments (as direct cash benefits). Government has expressed inability to maintain dual-pricing and doesnt have any way to give direct subsidy so all people who can, are benefitting from it. One way left is to penalize the people who are not supposed to benefit (annual tax as % of car price) but this you cannot administer this for single largest users : telecom towers gensets and other power gensets.

So Government is in mess on this issue and is praying for miracles rather than doing anything structured for it. At best to calm sentiments they may just end up taxing diesel cars (annual or one-time tax).

Taxation of petroleum products
Another fallacy of Govt's policy is the taxation structure:
Taxes on petro products : custom duty on imported crude (5% or thereabout), central excise tax (Rs. 15+ for petrol and Rs. 5 for diesel), VAT, entry & sales tax upto 25% levied by state (resulting in difference in pricing in Blr and Del) which contributes to 40-50% of landed price for petrol and 15-20% for diesel. So Government collects this money from all petroleum companies in tax and then promises to give them back some money for under-recoveries - so first collect and then pay them back. But these payments are not immediate and are more guarantees for payments in the future, oil bonds due to which oil companies are in cash flow mess.

Taxation on petroleum products contributes to close to 50% of all taxes and is used to fund social schemes. One side of the Govt (fin min) is not complaining at all on crude prices because Govt is meeting earnings numbers from petroleum products but on other side it is definitely having a cascading effect on subsidies.

I hope the Govt acts without waiting for miracles or luck, else it will become a bigger mess to handle and crippling for the country.

~maniac
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Old 9th November 2011, 15:51   #118
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

@Serious Manic: "The biggest users of diesel are generators"!! Care to enlighten us from where are you getting the data.
Please refer to this post
http://www.team-bhp.com/forum/indian...ml#post2456528

The break up of diesel usage was reported in various newspapers sometime back.
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Old 9th November 2011, 16:09   #119
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Here is some more information on the basis of antz.bin's calculation:

Diesel:
http://www.iocl.com/Products/HSD_31_oct_20111.pdf

Perhaps this offers the exact figures that come into play? I couldn't find a similar sheet for Petrol though. If someone has time, he could go through the link below and determine how it works out - http://164.100.24.208/ls/CommitteeR/Petro/6rep.pdf
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Old 9th November 2011, 16:12   #120
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

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Originally Posted by phamilyman
BUT please remember - UNION Government has actually cut customs and excise duty. The biggest gainers are the state governments who get a portion of these taxes as VAT but do not cut anything. Let's take out a morcha against our respective state govts!!
Actually the current Kerala Govt gave up their portion of the taxes for the 3 hikes after they came to power, which makes petrol in Kerala close to Rs2 cheaper than in TN. The irony is everytime there is a hike, the left parties in Kerala make a big hue&cry, burn public property etc, but they did not give up the State's share of the taxes even once during their 5-year rule. TN Govt also swallows the tax-gain coming with each hike, but dont forget to raise its voice against Centre for each hike.

Quote:
Originally Posted by esteem_lover
Man, would love to migrate to venezuela, even Egypt would do.
While not as cheap as Venezuela/Egypt, you are still better off than us TN folks due to petrol being cheaper in Pondy by 4-5Rs.

Last edited by supremeBaleno : 9th November 2011 at 16:14.
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