driving in india Fuel Prices To Fluctuate Daily From Day After Tomorrow (16th June)

[Pralay]

In April this year, state-owned oil companies like Indian Oil Corporation (IOC), Bharat Petrol Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) unanimously announced, that as a pilot project, their fuel sold through outlets in Chandigarh, Vizag, Puducherry, Udaipur and Jamshedpur will have dynamic pricing which will change on a daily basis from May 1.

 

After just a month of running the project, the companies have now announced that the same mantra will be implemented nationwide from June 16, 2017. That directly impacts all the 58,000 fuel stations owned by these three corporations.

 

Per litre rates of petrol and diesel will fluctuate daily as they will be directly linked to the oil prices in international markets and variation in foreign exchange rates between US Dollar (USD) and Indian National Rupee (INR).

 

The prices will vary from city to city as well as from petrol pump to petrol pump. All three state-owned companies will follow a marginally different pricing.

The earlier practice was a change in fuel prices once every fifteen days - on the 1st and 16th of every month. The prices fluctuated on the basis of average international price of the fuel in the preceding fortnight and currency exchange rates.

 

However, the new norm of dynamic pricing will eradicate the monumental changes in per litre costs, which rarely stayed below Rs 1 per litre. While it will create more transparency between the retailer and the consumer, it will also help the consumers align themselves with market dynamics

Cheers!

Pralay

PS: Contents are from source, image courtesy: Google

[Gowtham]

Nice write up @Pralay

Will it make any difference is the biggest question?

Who will verify the price at each and every pump on daily basis?

 

Who will calibrate the machines on daily basis?
 

I'm sure petrol pump owners will take their time to decrease the price,especially in b-towns.

Hope it wont create more complications on pricing and implementation.
 

[sagar]

Firstly @Pralay, As always you stand first to come up with such happening posts in India before anyone does and that is just brilliant.

As per my knowledge, The Govt. officials have done this Pilot project from the MAy of this year in five cities as you mentioned changing the prices daily only in the state run oil marketing companies such as Indian Oil, HP and BP but the private retailers such as Essar are still expected to adopt this but, It would definitely take time to shift to new price everyday for these involving the process of feeding on the oil dispensing calculators and stock positioning and measurement of the readings and I feel is could be a huge speed breaker for the fuel outlets on the highways that remain open throughout the night.

 

If the market is low, the rate will be low and when it is high the rates are higher. This move will help India to move towards the International standards of fuel pricing is what I feel. It is definitely a good move until it doesn't get affected by any political agenda.

[mansur]

I feel this is something to do with import parity when such process is being inculcated, it will be the cost of one importing oil for oneself. It does not account to the cost of production and distribution in the country but considers since intentional index. The cost of production and distribution in India is much lower than other countries. Still the oil companies insist on this parity price. This actually removes the companies in improving efficiency of their outrun and reduce the cost as they are already making huge margins.

For instance, Reliance who imports crude oil, refines it and export it for sale makes huge profits. The amount of margin that these companies play with is quite evident here. The only beneficiary of the daily price would be the oil companies and no one else.

The problem in this equals to a clear day light robbery by these oil companies.

[balag]

I feel the diesel and petrol prices will move in tandem with the price of crude oil in most countries and further, it will also lead to increased transparency in the system. This might enable smoother flow at retail outlets as many developed countries are already revising the prices of petrol and diesel on daily basis. I can sense a lot of improvement in the system once this comes into practice.

[Pralay]

Thanks @Ranger, @sagar for the appreciation!

Being a Cost Accountant & a GST professional, another issue I want to add up here:-
As petrol, diesel, natural gas, crude oil, ATF are outside the scope of GST(as on today), these products may see a hike in cost of production as these products will be out of the credit chain mechanism (for easy understanding, its kinda cashback of the tax paid for the materials used in production) of GST. And surely they will pass it on this hike to customer. It will be interesting to see how the pricing will be tackled by Govt.

 

Cheers!

[sai86]

Sad to see petrol prices increasing, they went down when this was initially launched.

[Gowtham]

July 21st 2017 : Diesel : 59.93/-

Aug 21st 2017 : Diesel : 61.98/-

 

Diesel Price hike : 2.05/-

 

July 21st 2017 : Petrol : 68.28/-

Aug 21st 2017 : Petrol : 72.64/-

 

Petrol Price hike : 4.36/-

 

On 8/20/2017 at 5:09 AM, sai86 said:

Sad to see petrol prices increasing, they went down when this was initially launched.

They increase 4.36/- in one month and no is bothered about it.
People lost the track of fuel price after they started fluctuating on the daily basis. 

[sai86]

Clearly not helping the common man.