How it is done

Saturday, August 15, 2015

6:27 PM

Example

1. FOB Price of Diesel = $ 124 / Barrel

2. Ocean Freight = $ 2 / Barrel
a. C&F Price = (1+2) = $ 126/Barrel = Rs. 48/Litre
* (1 Barrel = 159 Litres and $1 = Rs 62)
3. Import Charges = Rs. 0.5 / Lt
4. Custom duty = Rs. 1.5 / Lt
5. IPP = (3 + 4 + 5) = Rs. 50 / Lt
6. EPP = Rs. 48 / Lt
7. TPP = Rs. 49 / Lt
8. RGP of diesel= Rs. 49 / Lt
9. Inland Freight + Marketing Cost of OMC = Rs. 3 / Lt
10. Total Desired Price (8 + 10) = Rs. 52 / Lt
11. Subsidy by Central Govt. = Rs.10/Lt
12. Depot Price = Rs. 42 / Lt
13. Excise Duty + VAT + Dealer Commission = Rs. 10 / Lt
14. Retail Price (13 + 14) = Rs. 52 / Lt

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.

petrol and natural gas Page 1

IPP = C&F + import + custom

EPP = FOB
TPP (Trade Parity Price) = 0.8 x IPP + 0.2 x EPP
RGP of Diesel is currently based on TPP
RGP of diesel = TPP
RGP of Domestic LPG and that of kerosene
sold in the public distribution system is based
on IPP