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SEP 11 2017

Fuel cost sees 7% rise since start of dynamic pricing

  • Economic Times, ET Bureau / Hyderabad
  • Created: Mon 11th SEP 2017

 

Both petrol and diesel prices in Kolkata have risen by more than 7% since June 16, when the government introduced dynamic pricing of fuel.

Dynamic pricing, according to oil marketing companies, is to ensure the benefit of even the smallest change in international fuel prices can be passed on to dealers and consumers. The daily change of fuel price is also to remove the big hike in rates at the end of every fortnight.

Petrol, which was sold at Rs 68.06 in Kolkata on June 16, is now selling at Rs 72.91 on September 10. There’s been a clear rise of Rs 4.85. Similarly, diesel, which was sold at Rs 56.69 then, was selling at Rs 61.02 on Sunday, with a rise of Rs 4.33. There are more ups and fewer downs in the price change.

The major raw material for petrol is crude oil (called simply ‘crude’). At present, 75% of India’s crude needs are met through imports. And thus, international prices of crude and foreign exchange rates are the base components in determining the price of petrol at home. However, they form only a small component of the retail price, and the final price is determined by a host of other factors. In fact, more than 57% of the retail petrol price per litre goes towards taxes, duties, cesses and dealer margin, explained an Indian Oil official.

The hikes — thanks to daily changes, mostly in minuscule amounts (mostly in paise) — have stopped having a shock value, the way the fortnightly changes used to. But it is affecting daily budgets the same way. “The rise of fuel price to the extent of Rs 5 per litre in less than three months is quite a shocking rise. We are badly hit by it,” said Tapan Bandyopadhyay of Joint Council of Bus Syndicate. They already have moved a proposal of fare revision with the transport department.

The prices are revised at 6am every morning at petrol pumps. For the remaining non-automated petrol pumps, prices are changed manually each day. In automated stations, the change happens automatically. The non-automated stations can access the information through SMS, emails, mobile apps and web portals for dealers. Updated prices are immediately exhibited at the dispensing units for the public. Customers can access daily updated prices of petrol and diesel at all cities through the OMC app or through SMS.

“Petrol and diesel prices hovered around Rs 68.31 to Rs 73.16 and Rs 48.63 to Rs 55.48 a litre respectively in 2013-’14, when the price of Indian crude averaged at a staggeringly high of $105.52 a barrel. However, retail fuel prices still remain the same,” said fuel economics analyst Arup Ghosh Dastidar.

Tags

Oil Diesel Fuel price Oil Marketing Companies Petrol Diesel Prices Kolkata Crude Oil web India

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