State-owned oil marketing companies (OMCs) are set to increase the prices of petrol and diesel with effect from April 2020 to recover over ₹30,000 crore of investments made by these firms in upgrading their refineries to meet the BS-VI standards.
Hindustan Petroleum Corporation Limited (HPCL) chairman Mukesh Kumar Surana told The Hindu , “Upgrading to BS-VI was part of our expansion project in our Mumbai and Visakh refineries. Upgrading to BS-VI comes at a cost. We have invested close to ₹5,000 crore for upgradation to BS-VI. Besides, we need to incur additional operating expenses to run those units as we need to produce hydrogen. We will try to get a compensation.”
State-owned OMCs have so far invested over ₹30,000 crore in upgrading their refineries to produce cleaner BS-VI fuels after the government, in 2016 decided to meet the global best practices and leapfrog to BS-VI, skipping BS-V norms.
On the quantum of hike, Mr. Surana said, “We will not charge more than what we are supposed to do. We need to see the pricing as it depends on the international products prices and demand and supply in the international markets. We need to benchmark our prices with global prices.” He, however, did not elaborate on the exact hike for consumers.
BS-VI emission norms are equivalent to Euro VI, to be effective from April 1, 2020. “Pricing, we have not decided yet. It will be done closer to the launch. We will start making available BS-VI fuels in our depots by January so that all our outlets have these fuels by March. It may be a marginal hike between 50 paise per litre and ₹2 per litre,” the director of another OMC said.
Price build-up
Currently, the price build-up of petrol comprises the base price of ₹32.81 and freight cost of ₹0.35 per litre. The price charged to dealers (excluding excise duty and VAT) is ₹33.16.
With excise duty at ₹19.98 per litre, average dealer commission of ₹3.55 per litre and VAT (including VAT on dealer commission) of ₹15.30 per litre, the retail selling price at Delhi is rounded off to ₹71.99 per litre.
Similarly, price build-up of diesel includes the base price of ₹37.15 per litre. With freight cost of ₹0.32 per litre, the price charged to dealers (excluding excise duty and VAT) is ₹37.47 per litre. With an excise duty of ₹15.83 per litre, average dealer commission of ₹2.49 per litre and VAT (including VAT on dealer commission) of ₹9.64 per litre, the retail selling price at Delhi is rounded off to ₹65.43 per litre.
