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Old 11th June 2009, 11:27   #1
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Default New system launched for auto-LPG pricing

Kolkata. June 10 The public sector oil companies including IndianOil, BPCL and HPCL have introduced a new pricing mechanism for auto-LPG.
Under this, auto LPG has been priced 40 per cent cheaper than petrol to boost sales. The move has been initiated because pricewise auto-LPG was proving less attractive to consumers. Not without reasons though.
In sharp contrast to petrol and diesel, whose prices are controlled by the government, auto LPG, an alternative to petrol, was marketed under free pricing mechanism. The oil PSUs earlier sold auto-LPG at prices directly linked to those in the international market. The policy suffered a setback last year because, with the rise in international crude prices, the auto-LPG price also shot up causing drop in its sales.
“As crude prices started surging ahead once again, we decided to settle for a new pricing mechanism so as to retain volume growth by sacrificing margins, if necessary. The new mechanism, however, will be in force till margins are not squeezed below certain minimum level,” a oil PSU executive told Business Line.
Auto LPG is currently priced at Rs. 26.43 a litre, nearly 40 per cent cheaper than petrol at Rs. 44 a litre in Kolkata.
According to the official, the pricing mechanism, introduced at the beginning of this fiscal, yielded fruits. So far monthly auto-LPG sales volume by the three companies posted over 20-30 per cent increase to 14-17 thousand tonne in the first quarter of 2009-10 compared to the corresponding period last year.
“True, the number retail outlets have gone up, but the per pump throughput too has risen,” the source said.
When contacted, an IOC official said that the company added 56 new outlets during the last fiscal taking the total to 223 as against a total of 447 of all three companies. IOC was planning to add at least 70 more auto-LPG outlets during this fiscal.

source: The Hindu Business Line : New system launched for auto-LPG pricing
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