[NPV]

Alas, we're back to the days of widening the price difference between Petrol & Diesel.
What I fail to understand is that when such increases in price are effected citing international prices why should it be applied on Petrol alone ? These ad-hoc increases must also apply on Diesel, no ? Unfortunately this is not simple logic like that as it has other political ramifications.
This instance of Petrol price hike simply means that the next 4 or 5 revisions (in as many months?) of Diesel price will not help offset price differential

[saket77]

Originally Posted by NPV

Alas, we're back to the days of widening the price difference between Petrol & Diesel.

I always felt that its too early to celebrate the narrowing gap between prices of petrol & diesel. I don't understand that why, despite a framed policy of 0.50p increase on diesel every month, its not effected? Definitely a case of cross-subsidization. But we will also need to keep in mind that even if one does not drive a diesel car, lower prices of diesel is still beneficial for us because of the logistical & agricultural dependence of the country on diesel.

Regards,
Saket

[click]

It's Rs 76.94/ltr in Bombay.

[gomzi]

Originally Posted by Jignesh

Just read in news papers that Natural gas prices will also be doubled with effect from 1st April 2014. Any guess on how much the CNG prices will increase? If there is a huge hike in CNG prices, then the current incentive for buying CNG cars will expire.

Good point Jignesh. Even I was wondering how much would CNG prices at the pump be impacted. Knowing the govt., I think they'll probably double or more with taxes.

I read in the papers that the CNG price is a complex calculation, but none of the papers here described exactly what basis of the calculation is.
So either it's something that I dont understand, or its an excuse to raise the prices without explaining anything to anyone.

Again, I didn't understand the rationale behind the CNG price hike and that too a 100% hike! I would have though govt. should be promoting use of CNG as a cleaner fuel.

[rajshenoy]

I strongly feel that with Elections around the corner, Diesel price hike will eventually pause in couple of months and since then, we are at mercy of Crude/Falling rupee etc and obviously petrol prices will take a hit.

In this country, i dont think it is ever possible to price Diesel same as petrol. There are plenty who need fuel for bread and butter as against very small fraction who use it as a fuel.

[mjothi]

Originally Posted by gomzi

Good point Jignesh. Even I was wondering how much would CNG prices at the pump be impacted. Knowing the govt., I think they'll probably double or more with taxes.

I read in the papers that the CNG price is a complex calculation, but none of the papers here described exactly what basis of the calculation is.
So either it's something that I dont understand, or its an excuse to raise the prices without explaining anything to anyone.

Again, I didn't understand the rationale behind the CNG price hike and that too a 100% hike! I would have though govt. should be promoting use of CNG as a cleaner fuel.

The increase is not for now - comes to effect in April 2014. And this price is not the price at which it is bought by the users. This price is the one that the manufactures are guaranteed.

Yes. Not bit, but a lot of confusion around here. We would need to wait atleast next 6 month to know how it is going to be implemented.

It may not even happen. But announcement had done many good things to the market.

[prateekm]

Originally Posted by gomzi

Good point Jignesh. Even I was wondering how much would CNG prices at the pump be impacted. Knowing the govt., I think they'll probably double or more with taxes.

I read in the papers that the CNG price is a complex calculation, but none of the papers here described exactly what basis of the calculation is.
So either it's something that I dont understand, or its an excuse to raise the prices without explaining anything to anyone.

Again, I didn't understand the rationale behind the CNG price hike and that too a 100% hike! I would have though govt. should be promoting use of CNG as a cleaner fuel.

Business Standard estimates that for each $1/mmbtu in APM gas cost increase, the CNG price would be increased by Rs 2.4/kg. So for the $4.2 hike, expect an increase of approx INR 10.

http://www.business-standard.com/art...2800292_1.html

[sgiitk]

We should be thankful that the Brent - WTI differential in now under $6 and seems to be approaching 5.At the peak it was more like 23.

[Jignesh]

Originally Posted by gomzi

Good point Jignesh. Again, I didn't understand the rationale behind the CNG price hike and that too a 100% hike! I would have though govt. should be promoting use of CNG as a cleaner fuel.

Hello Gomzi,

Thank you.

Actually the rationale given for the hike in Natural Gas prices is - higher market prices will motivate more gas exploration within our country & reduce the burden on imported gas.

What you said is very correct - Gas pricing is very complex in India & nobody is able to explain the exact logic behind current & future prices.

What this means for Car manufacturers & buyers - nothing but confusion. Couple of months back there was mad rush for manufacturing & selling Diesel cars. But after recent hike in Diesel prices, Diesel cars available over the counter & waiting lists (read 6 months for Maruti Swift) have exhausted. Now we have the trend is shifting towards CNG cars, the buyers of which will find themselves in a rude state of shock in April 2014 when new CNG prices are decided.

Thanks,

[gomzi]

Originally Posted by prateekm

http://www.business-standard.com/art...2800292_1.html

Prateek, Thanks for the linky! This is one of the only articles which states with some certainty the effect of the CNG price rise at the pump.

Originally Posted by Jignesh

Now we have the trend is shifting towards CNG cars, the buyers of which will find themselves in a rude state of shock in April 2014 when new CNG prices are decided.

If as the business standard article states the increase at the pump price is only Rs 10/kg, then thats fine. It won't be such a big shock. CNG will still retain the cheapest and cleanest fuel tag - although the break even point for Auto CNG kits will be slightly longer.
I'll take that estimate with a pinch of salt, but will hope for it nevertheless.

[vkaul1]

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[neeld]

Originally Posted by hellmet

However, diesel price remains untouched until next week. Why?

And where does our govt get our crude from? 115$ per barrel? All the month Brent didn't exceed 106$ http://www.nasdaq.com/markets/crude-oil-brent.aspx

I was thinking the same as to why our government pays $115 per barrel when rates have been at-least $10+ lower per barrel in international markets. Even Natural gas price is at less than $ 4 per MMBtu.

Here are the current Crude Oil (WTI & Brent) & Natural Gas prices from Bloomberg:

[sgiitk]

Diesel hiked by 0.50 last evening. They claim under recovery at Rs.8.60!

[JohnyBoy]

Thought this may be useful to people staying/working in Navi Mumbai.

Due to Local tax difference, petrol is cheaper by 4 rupees in kharghar / panvel compared to vashi. There is almost similar difference for diesel also.

[Jignesh]

Originally Posted by gomzi

I read in the papers that the CNG price is a complex calculation, but none of the papers here described exactly what basis of the calculation is.

Hello Gomzi,

Though I do not know how market price of CNG is arrived at, but regarding the latest Natural Gas pricing policy in India, here is the calculation logic:

The new policy derives prices by combining two methods:

First - the netback price of Indian LNG term imports (excluding spot imports) at the wellhead of the exporting countries will be estimated. Such a netback weighted average price will be interpreted as the arm’s length competitive price applicable for India.

Second - take the weighted average of pricing prevailing at trading points of transactions namely - US (Henry Hub) & UK (National Balancing point).

Finally, the simple average of the prices arrived at through the above two methods will be taken. Such an overall average of global prices, derived on the basis of netback and hub/balancing point principles, will be taken as the economically appropriate estimate of the arm’s length competitive prices applicable for India.

Source: http://corporatelawreporter.com/2013...#axzz2XrSqKrMJ

I am not a economist or cost account, but with my limited work experience (of 12+ years) I understand that the market prices should be on Cost + Profit basis & not on average prices in some other countries.

Thanks,