FOB Price of Diesel = $ 124 / Barrel1.

(1 Barrel = 159 Litres and $1 = Rs 62)*C&F Price = (1+2) = $ 126/Barrel = Rs. 48/Litrea.

Ocean Freight = $ 2 / Barrel2.

Import Charges = Rs. 0.5 / Lt3.Custom duty = Rs. 1.5 / Lt4.IPP = (3 + 4 + 5) = Rs. 50 / Lt5.EPP = Rs. 48 / Lt6.TPP = Rs. 49 / Lt7.RGP of diesel= Rs. 49 / Lt8.Inland Freight + Marketing Cost of OMC = Rs. 3 / Lt9.Total Desired Price (8 + 10) = Rs. 52 / Lt10.Subsidy by Central Govt. = Rs.10/Lt11.Depot Price = Rs. 42 / Lt12.Excise Duty + VAT + Dealer Commission = Rs. 10 / Lt13.Retail Price (13 + 14) = Rs. 52 / Lt14.

Example

What is presently used in India EPP/ IPP/ TPP?Presently for the pricing of diesel TPP is used.

Why Finance Ministry is insisting on using EPP?From the above table it is clear that if EPP is used instead of TPP, then TDP will become 51 instead of 52. Hence Under-Recovery will reduce by Rs.1/L. So, Govt. will have to give lesser subsidy to OMCs. Therefore, Govt. deficit will come down.

Why OMCs and Petroleum Ministry are insisting on using TPP?It is clear from the above answer that if EPP is used instead of TPP than OMCs will get less subsidy from Central Govt. But their expenditure will remain exactly same as earlier. Hence, their financial health will deteriorate.

IPP = C&F + import + custom•EPP = FOB•TPP (Trade Parity Price) = 0.8 x IPP + 0.2 x EPP•

RGP of diesel = TPP○

RGP of Diesel is currently based on TPP•

RGP of Domestic LPG and that of kerosene sold in the public distribution system is based on IPP

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How it is doneSaturday, August 15, 2015 6:27 PM

petrol and natural gas Page 1