For lowering fuel taxes, the Centre and States need to see how tax revenue from other sources can be boosted. If they don’t, then consumers will have to pay high fuel prices perennially Faced with skyrocketing prices of petrol and diesel, (with petrol crossing the Rs 100-mark in Sri Ganganagar), Prime Minister Narendra Modi has blamed the erstwhile UPA regime for not doing enough to increase domestic production, thus making India vulnerable to rising international prices, while Minister for Petroleum and Natural Gas Dharmendra Pradhan has urged oil exporting countries to exercise restraint while fixing the price of crude. However, their arguments don’t enthuse. With the pricing of oil products being linked to international prices (even domestic refineries are paid...
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Category: Pricing Policies & Subsidies
Oil prices can be reined in
Currently, India imports nearly 85% of its crude oil requirement, making it perennially vulnerable to rising international price Skyrocketing prices of petrol and diesel (in some states such as Rajasthan, petrol has hit the Rs 100 per litre mark) has led to a war of words between the ruling dispensation and the Opposition. While the former has put the blame squarely on the erstwhile UPA regime for not doing enough to increase domestic petroleum production, with Prime Minister Narendra Modi himself leading the charge, the latter says the “steep increase in central excise duty (CED) under Modi” is the real culprit. Currently, India imports nearly 85% of its crude oil requirement, making it perennially vulnerable to rising international price. Modi’s...
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High fuel prices – who is the culprit
Faced with skyrocketing prices of petrol and diesel (in some states such as Rajasthan, petrol has hit the psychological Rs 100 per litre mark) even as the Prime Minister, Narendra Modi has lamented at the erstwhile UPA – regime for not doing enough to increase domestic production (currently, India imports nearly 85% of its crude oil consumption) making India perennially vulnerable to rising international price, the minister for petroleum and natural gas, Dharmendra Pradhan has urged oil exporting countries to exercise restrain while fixing the price of crude oil. The arguments of both are not convincing. Pricing of oil products being linked to international price (even domestic refineries are paid for their supplies on this basis), even if the share...
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Time for Govt to make a clear-cut choice
If the Centre allows gas producers to charge what they want, one shudders to even think of where the fertiliser and power subsidy bill will reach The State-owned Oil and Natural Gas Corporation (ONGC) is forming a new wholly-owned subsidiary company with the objective of sourcing, marketing and trading natural gas. The company is already into exploration and production of gas (besides crude oil) which it sells to a variety of industries manufacturing fertilisers, power, chemicals, petrochemicals, CNG, gas for household consumption and so on. So what has prompted it to set up a separate company solely for the purpose of trading and marketing of gas? It is not a simple case of business restructuring, but an attempt to circumvent control...
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Gas pricing – make a clear choice
The state-owned Oil and Natural Gas Corporation (ONGC) is forming a new wholly-owned subsidiary company with the objective of sourcing, marketing and trading of natural gas, liquefied natural gas (LNG) business, gas to power business and so on. The company is already into exploration and production of gas (besides crude oil) which it sells to a variety of users viz. fertilizers, power, chemicals and petrochemicals, CNG, gas for household consumption etc. What has prompted it to set up a separate company solely for the purpose of trading and marketing of gas? It is not a simple case of business restructuring; instead it is an attempt to circumvent control on price of gas imposed by the Union Government. To see how...
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Stop the flip-flop
The policy drift on gas pricing must stop. The November 2014 norms provide a robust system of gas pricing which balances the interests of both the producers and consumers The Narendra Modi Government is keen to promote the use of gas and support it by increasing domestic production. But it wants to keep the gas price low so that it is affordable to key sectors, such as fertilisers and power producers, and is in sync with the macro objectives of keeping subsidy payments and fiscal deficit under check. This overarching objective is glossed over when it comes to pricing, even as the Centre is obsessed with giving a higher price to exploration and production (E&P) companies. Under the November 2014 guidelines for...
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Gas pricing – conundrum
The Union government has fixed the price of domestic gas at US$1.79 per million British thermal units (mmBtu) effective for six months starting October 1, 2020. This is down by about 25% from US$2.39 per mmBtu applicable to the six month period April 1, 2020 – September 30, 2020. That itself was 25% lower than the price of US$3.23 per mmBtu prevailing during October 1, 2019 – March 31, 2020. The current price is nearly half of what it was 6 month ago. The domestic production of natural gas accounts for about 50% of the total consumption in India of about 175 million standard cubic metres a day (mmscmd), balance 50% comes from other countries and is imported as liquefied...
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Uniform transport tariff for gas – a flawed idea
Speaking at the launch of the nation’s maiden online gas trading platform by Indian Gas Exchange (IGX), petroleum minister Dharmendra Pradhan alluded to “a new pipeline tariff policy that will replace existing practice of seven different pipeline operators charging separate rates and customers away from gas source paying more than those nearer to source.” Petroleum and Natural Gas Regulatory Board (PNGRB) Chairman DK Saraf was even more specific when he spoke of a “single rate across pipelines so as to make the price of fuel uniform for customers across the country.” According to the minister, “the new policy will help bring down the cost of natural gas, make it affordable in every part of the country and facilitate development of...
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Uniform transport tariff for gas – a flawed idea
Speaking at the launch of nation”s maiden online gas trading platform by Indian Gas Exchange (IGX), union minister for petroleum and natural gas (MPNG), Dharmendra Pradhan reiterated the commitment of Modi –government to raise the share of natural gas in the energy basket from existing around 6% to 15% by 2030 in sync with its avowed objective of promoting use of environment friendly fuel. Pradhan also alluded to ‘a new pipeline tariff policy that will replace existing practice of seven different pipeline operators charging separate rates and customers away from gas source paying more than those nearer to source’. The Chairman, Petroleum and Natural Gas Regulatory Board (PNGRB), Dinesh Kumar Sarraf was more specific when he hinted at ‘single rate...
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Fuel prices are burning
We have an abhorrent situation whereby taxes alone account for about two-third of the price at the pump. The high fuel price contributes to high inflation and higher costs of fertilisers and food During the last three weeks of June, the oil marketing public sector undertakings (PSUs), namely the Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL), increased the retail prices of petrol and diesel continuously almost daily. The cumulative hike works out to about Rs 9 per litre of petrol and Rs 11 per litre in case of diesel. As a result, the current price of both the fuels in Delhi is Rs 80.5 per litre. In April/May, petrol was selling at Rs...
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