Sunday, May 15, 2011

petrol up R5 a litre,50% is taxes of total price !!!!!!


on Sunday, May 15, 2011

In what will substantially increase commuting costs, state-owned oil companies on Saturday increased petrol prices by R5 per litre.

Effective Saturday midnight, the hike in petrol prices is the steepest so far. The last revision was made in January, when the price was increased by R2.50 per litre.

Petrol in Delhi will now cost R63.37 per litre compared to the previous R58.37 per litre.

Hindustan Times had first reported in the last week of April that a fuel price hike would be announced soon after the assembly elections in five states.

The hike, which oil firms had put on hold since January even though crude oil had touched a two-and-a-half-year high, came a day after election results in the five state were announced.

While prices of diesel and cooking gas (LPG) have been left untouched for now, government sources said the petrol price hike is likely to be followed by a R4per-litre increase in diesel rates and R20-25-per-cylinder hike in LPG prices later this month.

Petrol prices in other countries(in Indian Rupee)

  1. UK=97
  2. Japan=82
  3. Germany=75
  4. USA=47
  5. China=38
  6. Pakistan=36
  7. UAE=18
Oil company are losing Rs 5.50 /Per lt on petrol even after Increase.

A rise in the international oil prices exerts an upward pressure on domestic prices of petroleum products,but Ad valorem rates of VAT imposed by the state government further aggravates the impact of international oil prices on the consumers.

Andhra Pradesh levies the highest sales tax of 33 per cent on petrol in the country, followed by Tamil Nadu, where it is 30 per cent. Kerala, which levies 29.01 per cent VAT on petrol, has the highest sales tax rate for diesel at 24.69 per cent.Few state also charging cess like Punjab on petrol .In Punjab State levis effective rate on Petrol is around 32%.

Pondicherry has the lowest sales tax or VAT on petrol in the country at 15 per cent, while Haryana and Punjab have the lowest rates for diesel at 8.8 per cent.

What to talk of Central duty like Custom and excise which may ends up around 20-25% .So effectively 50% price of the petrol is Taxes and only 50% is actual price.

Crude Rate is around $120 and dollar rate is 45Rs so crude rate per barrel is Rs 5400/-. Ad other costs are around 30% and rate of petrol will be 7000/- barrel .if barrel=200 lt then avg cost of petrol is 35/- per litre means other 30-35 Rs are taxes . 


It means higher crude oil prices are not only responsible for increase in Petrol prices but State and central taxes are also the main reason for increase in prices.
Any increase in fuel prices by oil companies has a cascading effect on retail rates paid by consumers due to the ad valorem nature of the state sales tax.

The government had in June last year freed petrol prices from its control but oil companies continued to follow informal advice from the oil ministry on rate revisions.

Despite global crude prices touching over $120 a barrel, the oil companies were not allowed to raise prices since January in view of elections in states such as West Bengal, Tamil Nadu and Kerala.

“Petrol is a rich man's fuel and the increase in its price was needed due to rising global crude oil prices,“ said a senior petroleum ministry official, justifying the hike An empowered group of ministers (EGoM) under finance minister Pranab Mukherjee will meet soon to decide on the quantum of hikes of diesel and LPG.

The petrol price surge will directly impact household budgets -already pummeled by soaring prices of essential food items and commodity prices.The move is also certain to fuel inflation.

Oil companies are losing R18.19 per litre on diesel and R329.73 per 14.2-kg cylinder of liquefied petroleum gas.

Calling it a “moderate“ increase, chairman and managing director of the country's largest fuel retailing firm, Indian Oil Corporation (IOC), RS Butola, said, “Even after this increase, we are still losing R5.50 per litre on petrol.“

“Against a desired price of R10.50 per litre of petrol, IOC has effected a reduced price increase of only R5,“ he said.

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