Retail oil prices could be down by ₹5-8 after crude slide: Data
GREAT CRASH Cost of India’s crude oil purchase price on March 10 was ~2,552 a barrel, a level close to what it was on Dec 16, 2015
NEWDELHI: The fall in crude oil prices — by 48% since April 1, 2019, and by 31% on Monday alone — have once again highlighted the opacity of retail fuel prices in India.
According to HT’S analysis, retail prices of petrol and diesel should be ideally cheaper by ₹5 per litre and ₹8 per litre respectively, after factoring in the rupee-dollar exchange rate, central and state levies, and dealer margins. The cost of India’s crude oil purchase price [Indian basket] on March 10 slumped to ~2,552.56 a barrel, a level close to what it was on December 16, 2015, when petrol was being sold at ~59.98 a litre and diesel at ~46.09 a litre, according to the oil ministry’s data-keeper Petroleum Planning and Analysis Cell (PPAC). The cost of Indian basket crude was ~2,603.80 per barrel on December 16 about four years ago.
A detailed analysis of the official data that factors in prevailing exchange rates, dealer commissions and taxes (central excise and value added tax), conservatively estimates that petrol should have been ideally sold at ~65.3 per litre in Delhi and that the pump price of diesel should have been ~55.01 per litre.
Despite global crude oil prices having crashed since Monday, domestic prices have remained firm. To be sure, local prices are also a function of the nature of the contracts Indian refiners have with their oil suppliers and also the lead period and inventory they work with.
According to the state-run Indian Oil Corporation (IOC), petrol in Delhi was priced at ~70.29 a litre on Wednesday and diesel at ~63.01 a litre, reflecting a meagre downward revision of 30 paise and 25 paise a litre, respectively.
The exchange rate on March 10 was ~73.95 per dollar, and the dealer margin on petrol was ~3.55 per litre and on diesel, ~2.49 a litre. Besides, petrol attracted ~19.98 a litre excise duty and ~15.25 a litre VAT in Delhi. Levies on diesel were ~15.83 per litre (excise duty) and ~9.48 a litre VAT.
The petroleum ministry, IOC, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) did not respond to queries from HT.
On Monday, benchmark Brent crude price fell to $35.33 per barrel from the Friday close of $45.27/barrel because of Russia’s refusal to join the other members of the oil cartel, the Organisation of the Petroleum Exporting Countries (OPEC), in cutting output by 1.5 million barrels per day to counter a slump because of the Coronavirus outbreak.
Benchmark crude prices hovered around $35.8 a barrel on Wednesday due to weak global sentiment and a potential price war. The Opec-plus Russia grouping held a meeting in Vienna on Friday. After Russia refused to agree to the supply-cut, Saudi Arabia, one of the world’s largest oil producers, offered to cut its official selling prices by $6-8 per barrel from April, triggering a price war among producers for the market-share.
On Wednesday, Saudi Arabia decided to further increase production, as did the UAE. Several petrol pump dealers said on condition of anonymity that the three state-run oil marketing companies (OMCS), IOC, BPCL and HPCL, do not have a transparent pricing mechanism and formed a kind of cartel on pricing matters. Since levies on fuel haven’t been increased, the increased margin (because of lower prices) must be flowing straight to the bottom line of these companies, analysts pointed out.
“OMCS are misusing pricing freedom. Retail prices of all the three companies are almost same, with less than five paisa difference,” a Delhi-based dealer said requesting anonymity. The three state-run fuel retailers control about 90% of the domestic fuel retail market. The United Progressive Alliance (UPA) government in 2010 allowed them to fix retail prices of petrol. The NDA government freed diesel from price control in 2014. Before free-pricing was allowed, fuel retailers faced the brunt of high crude prices resulting in so-called under-recoveries when they had to sell fuel at prices below their cost of production.
A Meerut-based dealer and member of the Empowering Petroleum Dealers Foundation (EPDF), Hemant Sirohi said, “It is quite surprising that refining margins of private refiners often go as high as $8 per barrel compared to about $4 barrel margin for the public sector oil marketers, but all companies sell petrol and diesel at the same rate.”
On prosecution of security forces, the court said that it can’t be considered “as no findings of use of excessive force, violating the guidelines issued in the SOP, have been recorded by any fact finding authority…. Hence the persons alleging use of excessive force, due to which death or injury has occurred, can very well approach the appropriate forum to establish the same and seek redressal.”
The court said that as far as the prayer for compensation was concerned it was of the “opinion that so far as the constitutional tort is concerned, the state has fulfilled its obligation, in as much as they have made ex gratia payments to most of the injured persons …and with respect to the remaining …their cases shall be decided in tune with government policy in due course of time”.
The home minister rejected charges from the Opposition, especially the Congress, of lapses and crucial delay in controlling the riots. He described the particularities of north-east Delhi, which was the epicentre of the riots, and defended the role of the Delhi Police and praised it for containing the violence in 36 hours, within a limited geography. He also outlined the various measures taken to control the riots, the mechanisms set up for subsequent investigation and its preliminary findings; emphasised how he personally was monitoring the situation on a real-time basis; and said that he had requested the national security adviser (NSA), Ajit Doval, to visit the area to raise the morale of the security personnel. Finally, he accused Opposition leaders of provocative hate speeches that created the conditions for the riot.
“There is prima facie evidence that the riots were a pre-planned conspiracy and the police are unearthing proof of this. The guilty, whoever he may be, will be arrested,” the home minister said. To allay apprehensions of opposition leaders, who alleged that many innocent citizens were being arrested, Shah said that no one would be arrested without “strong evidence”.
Earlier in the debate, the home minister came under sharp attack by the Opposition, led by the Congress, which blamed him and his government for ineptly handling the deadly violence.
Asking the home minister to quit, Congress leader Adhir Ranjan Chowdhury said: “Delhi riots could have been stopped if timely action was taken. The Delhi Police is called a modern police. They have all kinds of sophisticated weapons and measures. The Centre can also call paramilitary forces. Despite these things why did this happen? Where was the home minister?”
Chowdhury said “Nero was playing fiddle while Rome burned”, pointing to the government’s preoccupation with the visit of US President Donald Trump at the time. Chowdhury also alleged that Delhi high court judge S Murlidhar was transferred out as he had passed critical orders on the failure of the Delhi Police.
The Trinamool Congress’s Saugata Roy and NK Premchandran of the Revolutionary Socialist Party also demanded Shah’s resignation. Asaduddin Owaisi of the All India Majlis-eittehadul Muslimeen said the country was witnessing a “tsunami of Hindutva hate”. He called for an impartial probe to punish the rioters.
Giving details of police investigations into the riots, Shah said police have unearthed evidence of a conspiracy, suggesting the violence was not spontaneous.
“The police have evidence of a conspiracy and the probe is on. Nearly 300 people entered the capital from Uttar Pradesh. A separate case of conspiracy will be filed. Money was brought in through hawala. Fake messages were spread through social media. Two people linked to the Islamic State have been arrested,” Shah said.
Others with high profile background are: Ambika Sood (additional advocate general), wife of Chandigarh BJP chief, Arun Sood; Rajat Gautam (deputy advocate general), son of JJP MLA, Ram Kumar Guatam; Aman Bahri (additional advocate general) brother of justice Ritu Bahri of Punjab and Haryana high court; Deipa Singh (additional advocate general) wife of former Haryana director general of police (DGP), KP Singh; Mahima Yashpal Singhal (deputy advocate general), daughter of former Haryana DGP, YP Singhal; Pankaj Midda (additional advocate general), a relative of Haryana BJP MLA Krishan Midha; Ranjana Shahi (additional advocate general), former UT BJP councillor; Ranvir Singh Arya son of Bharti Janta Party (BJP) leader Bachhan Singh Arya and Ravinder Singh Dhull (additional advocate general), son of BJP leader, Parminder Singh Dhull.
Ravinder was a petitioner, in 2017 Panchkula violence case PIL reported in the aftermath of conviction of Dera Sacha Sauda head Gurmeet Ram Rahim Singh, which is still under adjudication at the high court.
Sandeep Singh Mann (additional advocate general), a relative of justice (retd) TPS Mann and Sanjay Mittal (additional advocate general), a relative of justice (rerd) SK Mittal, are also on the list. Both were former judges of Punjab and Haryana high court.
Also on the list are Sumit Jain (additional advocate general), a former secretary of Punjab and Haryana High Court Bar Association (PHHCBA); Sheenu Sura (deputy advocate general), wife of Panchkula additional district and sessions judge; Harsh Rekha Kapoor (assistant advocate general), daughter of justice (retd) Amar Dutt.
Haryana advocate general BR Mahajan said due process has been followed and all the appointments have been made on merit.
“There was no political or any other kind of interference in appointments,” Mahajan said. While 78 lawyers have been appointed at Chandigarh office taking the number up to 148 law officers, 12 appointments have been made for Delhi office to defend state’s cases in the HC and the Supreme Court. Mahajan said that this was the final list.
AN ANALYSIS OF
OFFICIAL DATA ESTIMATES THAT PETROL SHOULD HAVE BEEN SOLD AT ~65.3 PER
LITRE AND DIESEL AT ~55.01 IN DELHI