Can't keep changing fuel prices on knee-jerk basis: Pradhan

Said shifting to GST regime will be the only way to have a transparent tax structure on fuel items

Share prices of the three government-owned oil marketing companies (OMCs) fell on Wednesday on pricing worries, which the government later said were baseless.

Reports suggested the three -- Bharat Petroleum Corporation (BPC), Hindustan Petroleum Corporation (HPC) and Indian Oil Corporation (IOC) -- might be asked to absorb the recent global hike in crude oil prices. As a result, their share prices fell 6.2%, 5.1% and 4.3%, respectively, on the BSE exchange.

The markets were worried on whether the government was going back to the regulated pricing era. However, after trading hours, petroleum minister Dharmendra Pradhan said the government would not ask state-run companies to absorb the price rise in petrol and diesel and would stay to market-driven pricing.

He added that a shift to the goods and services tax (GST) regime was the only way to have a transparent tax structure on fuel items.

"The government has no business to interfere in the day-to-day affairs of companies. We have linked product prices to the market and will stick to that," said Pradhan. The minister added that global prices would ease very soon.

"A knee-jerk reaction is not required when we are following a formula. We expect prices to come down soon. This increase is mainly because of the cyclones that hit the US, which resulted in a decline of refining capacity by 13% and an increase in diesel prices by 20% and petrol by 18% in the past three months," he added....READ MORE

Diesel, petrol prices to change daily from June 16; dealers raise concerns

Since May 1, the dynamic fuel pricing model has been applied on a pilot basis in 5 cities

State-run oil marketing companies (OMCs) have decided to roll out the daily revision of fuel prices nationally from the second fortnight of June.| ECONOMY NEWS

However, this has raised concerns about viability and inventory management among dealers. Currently, Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) review retail fuel prices every fortnight while taking global crude oil prices into account. "We are planning to have a national launch of the dynamic pricing system by the second half of this month. However, dates are yet to be finalised," said a top official from an OMC. This development comes after reports that petrol and diesel prices will be revised on a daily basis from June 16.

It was on May 1 that the dynamic fuel price model was launched at five locations – Pondicherry, Chandigarh, Jamshedpur, Udaipur and Vishakhapatnam – in line with global practices. Interestingly, private fuel retailers like Essar Oil and Reliance Industries too followed the system in these cities.

"This will be a cause of concern as dealers will not be able to plan on how to manage their inventories. Moreover, not all the outlets in the country are automated. This may also affect our margins," said A D Sathyanarayan, president, the Consortium of India Petroleum Dealers (CIPD). CIPD has a presence in states like Kerala, Tamil Nadu, Karnataka, and Maharashtra. On a monthly basis, each of these outlets consumes an average of 170 kilolitre of fuel. (READ FULL STORY)

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Take note! Petrol, diesel prices to change every day from May 1

Daily price change will remove big leaps in rates that need to be effected at end of fortnight

 

Come May 1, petrol and diesel prices will change every day in sync with international rates, much like what happens in most advanced markets.

State-owned fuel retailers Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL), which own over 95 per cent of nearly 58,000 petrol pumps in the country, will launch a pilot for daily price revision in five select cities from May 1 and gradually extend it to all over the country.

"Ultimately, we will be driving towards market linked rates on a daily basis at all pumps across the country," IOC Chairman B Ashok told PTI.

A pilot for daily revision of petrol and diesel price will be first implemented in Puducherry, Vizag in Andhra Pradesh, Udaipur in Rajasthan, Jamshedpur in Jharkhand and Chandigarh, he said.

State fuel retailers currently revise rates on 1st and 16th of every month based on average international price of the fuel in the preceding fortnight and currency exchange rate.

Instead of using fortnightly average, pump rates will reflect daily movement in international oil prices and rupee- US dollar fluctuations.

"It is technically possible to change rates daily but we have to first do a pilot. Once pilot is done and its implications studied, we will extend it to other parts of the country," he said.

While Ashok said the pilot is to be "launched within one month" and did not give a specific date, industry sources said the pilot is planned to be launched on May 1.

Daily price change will remove the big leaps in rates that need to be effected at the end of the fortnight and consumer will be more aligned to market dynamics.

While petrol price was freed from government control in June 2010, diesel rates were deregulated in October 2014. Technically, oil companies have freedom to revise rates but often they have been guided by political considerations.

Rates differ by only a few paise between pumps of the three state fuel retailers. Unbranded petrol at IOC pumps in Delhi costs Rs 66.29 per litre, while the same at BPCL pumps in the city is priced at Rs 66.37 a litre. HPCL pumps sell for Rs 66.48 per litre.

(READ MORE)