Our Central Gov (UPA) has given privilege to petroleum companies in last June 25th for fixing petrol prices. And the petrol price was INR 47.93 (@delhi). Within these 11 months, the price was increased 11 times!!! That means around 30% hikes within this short span of time. Now the petrol price is higher than the price of AviationTurbineFuel- ATF (which is used in Air crafts). Now ATF has 60.50 @ delhi
Now oil companies can raise the price without any notification or any approval from the government. Yet another hike is expected within a week or two. And also the Gov is planning to withdraw the subsidy for LPG gas. If it happens, the economists predict that it’s price may become around 650.00. Now its price is 360.00. UPA has given this privilege to companies for helping Ambani's Reliance and Ravirooya-Sasirooya brother's Essar private petroleum companies. Till last June, they were struggling in Indian Oil Market. So the Gov has given privilege for them to fix the Oil price and for increasing the price whenever they want. These steps Point that the congress led UPA Gov is not concerned about the common people in India. They always say that the Oil companies are in loss. It is actually misleading arguments. If we look at the share values of these oil companies in National Stock Exchange, we can't say that they are in loss. I think the Gov is concerned only about the Reliance and Essar. To make these companies on profit, we - the common people - need to take more burden. The Gov is acting as a promoter for these companies :(.
One more important thing is that, the UPA Gov has given 12,000 Crs subsidy to petroleum companies. Then I don't know how they can again *CRY* with the BIG LOSS story. Another point that I would like to bring to your attention is about the salary scale of the our Co-operative oil company employees. Most of the employees have more than Rs.1,00,000/- of salary and they have the highest salary scale in co-operative setter. That means the major portion of the income goes for salaryL.
While I spending some time on the Internet, I got to visit our Oil companies’ websites from which I understood that "the loss" arguments are fake. From their site itself, they pointed that they are running on Crores of profit. So I would like to share that information with you. Just go through the below information that i have taken from their own websites and realize the BIG *LOSS* our petroleum companies.
Indian Oil Corporation
From their site itself, they announced that the company is running with Rs 10,221 Crs for the year 2009-2010.
See the quarterly based details,
About HP, they have 1300 Crs of profit after the tax for the year 2009-2010. For the period 2008-2009 it was 575 Crs. I have taken this information form HP’s annual report-2010 (Page No 4).
You can collect the turn over details from their site itself.
Bharat Petroleum Corp.
From BP’s 2010’s annual report, I found that the company is running with the profit of 1537.62 Crs (Annual Report 2010, Page No.107).
I think you got a clear picture about this.
My Recommendation: I think, the only one possible way to express our objection against this, is to minimize the use of petrol. Try to avoid our private vehicles Bikes/Cars as much as possible and depend on public transport.
So be aware about the story of *BIG LOSS* of petroleum companies and try to reduce the usage of petrol. This is only thing that we can do from our side :(
Thanks for visiting blog post...
Anish Panthalani
Nice work dude...
ReplyDeleteGreat Post,
ReplyDeleteWhat the hell is going on in INDIAN politics
Afterall Common people are suffering...............
excellent anish..well done. I think the ppl who stay near to their office, say around 4 to 5 kms, could use the newest model Bicycle. I am in fact planning to buy one such..This is an excercise for us as well as a very good "excercise" for our "Pocket"
ReplyDeleteUPA is not for the People. Ministers and their relatives making money and supporting private companies
ReplyDeleteits awesome Anish, you have done a great research on the ongoing crises.. This proves, whatever govt rules, we will still be the same.
ReplyDeleteGood work anish..at this rate the day is not far when petrol price will be Rs. 100/ lt...but somehow i don't understand the paradox....petrol prices are on an upswing and so is automobiles sales....
ReplyDeleteThe prices of items of daily use and consumption by common man have increased manifold, severely upsetting the household budgets and now the recent hike in petroleum prices has further burdened the life of common man and made it much more difficult for him to make both ends meet. Thank you Anish for this detailed Info.. I've shared to my social networking accounts
ReplyDeleteI have no words to tell ,but still , Layman is suffering with each hike , after some days they used it with new price .Then after some days again they get agitated for the hike ,it is routine .But no 'Anna Hazare' is ready for huger strike against this . The politician knows the pulse of general public before their term get over they reduce petrol price 1 Rs ,for hiking 50 Rs for the next term.So this is the game plan for all political parties
ReplyDeleteWe have to protest against this by forwarding this to many people at least!!.
ReplyDeleteGood attempt indeed. However, it should have been a bit more categorical. When the oil companies say that they're in loss, it's the deficit in their profit margin is all. That's a normal term in business trajectory.
ReplyDeleteNevertheless, the oil price in India is indeed way higher than even so economically ambushed Pakistan. We've got too many Taxes and duties labelled different ways by both central and state govts taking a toll on the over all price for the oil.
In a nation's growth perspective, it's inevitable to omit the subsidies and the Govt must be rather keen to improve the economy. It should not be collusive with other corporate sector to help their pocket to grow.
P.S: India should have liquidated the billions it shed in Africa/Afghanistan to help and uplift the poor in India.
Dear Anish,
ReplyDeleteWonderful bit of research doen by you, just that the interpretation has a gone a bit biased is what I feel.
a) The term "LOSS" -
CRUDE COST + REFINING COST should atleast equal SELLING PRICE but
now it is CRUDE PRICE + REFINING COST = UNDER RECOVERY + SELLING PRICE.
so this UNDER RECOVERY is LOSS; and thats what OMCs have a rightful claim to.
The Govt used to reimburse OMC a part of this under recovery on petrol, diesel , kerosene and LPG.
Starting June 2010, GoI has stopped compensating OMCs for selling petrol at below market price but continues to do so with diesel, kerosne and LPG.
b)
OMCs have other businesses too - petrochemical, refining and seling crude abroad, pipeline networks and city gas distribution to name a few. The fact that they are profitable overall and still in staying in business despite the under recoveries should be a matter of pride to us rather than an organisation like NATIONAL AVIATION COMPANY of INDIA LIMITED - better known as AIR INDIA.
c)
Oil and Gas business is a high risk and huge investment business. A greater risk job entitles better pay than a lesser risk job. Thats why a pilot gets a higher pay , a CEO for that matter gets larger pay et all. For that fact, OMCs have implemented the central Govt 6th Pay COmmission norms , as with PSU banks or any other central government organisation for that matter. Hence the statement " Most of the employees have more than Rs.1,00,000/- of salary and they have the highest salary scale in co-operative setter. That means the major portion of the income goes for salaryL. " stands unjustified.
Do you know for that matter - the highest part of BSNL revenues go to pay pensions ? Its an epidemic with each Central Govt organisation dear friend, we need to find a common solution to this.
d)
"My Recommendation: I think, the only one possible way to express our objection against this, is to minimize the use of petrol. Try to avoid our private vehicles Bikes/Cars as much as possible and depend on public transport. "
YOur recommendation is spot on ! But how to implement that ? See, the basic theory of economics is that when price increase , if the price elasticity of demand wil cause the consumption to change. But continuosly increasing petrol prices and suppressing diesel, LPG and kerosene prices have distorted the market .
Now we have
a) more diesel cars - less fuel efficient - more polluting
b) adulteration using kerosene
v) LPG kits in even SUVsn using LPG meant for kitchen !
Goes against the rule " POLLUTER MUST PAY "
e)
Comparing the prices , if you remove the taxes ( Central n State) the prices would match or atleast be near; tells you a story doesnt it ? GoI doesnt know where to find revenues to meet it expenditure - why not tax liqour or cigarettes more is a burning question ?
End of the day ; energy is something we need day in and out. Just that a more efficinet and clean source of energy must be incentivised at cost of the pollluting. SOlar, geotherma n wind are just some indicators; once they become viable we would switch over to them - but money to be spent on research is being diverted as subsidies.
REgards.
Shankhar N.S.
MBA ( Oil and Gas)
School of Petroleum Management,Gandhinagar, Gujarat,India
shankhar26@gmail.com
Just supporting the above view of my dear colleague Shankhar, there are many things which you have not visited in your "detailed" research.
ReplyDeleteDo you have any idea of how the Petrol is priced before it reaches to your fuel tank? Let me give you an example:
Say 'x' is the import parity price (the price of the petrol at par with the international crude price) of the patrol. Let's call it the basic price.
Now we have 14% Excise Duty (ED) on Petrol.
In addition to that we have Additional Excise duty of 1500 Rs/Kl (Approx) on Petrol.
On top of it we have 2000 Rs/Kl of Spl. Excise duty on Petrol.
So basically we are at 1.4x + 3.5 per liter.
Forget about 3% Educational Cess on the duties (Small Amount!)
On that we have 2% Entry Tax (on avg.) applied by the states. After that there are other State Specific levies like VAT, it is 21% in MP & even higher in Maharashtra.
In addition to that Mumbai Municipal Coropration levies about 3% of Octroi on crude for crude to be processed in Mumbai (Where annualy approx 20 MMT of crude is processed out of 80 MMT for Indian requirement)
On top of it the Petrol produced needs to be sent to Depot locations by Road, Pipelines or Railways. Government Levies Service Tax on the transportation charges.
Any good finance person will tell you that against income of 131,000 Cr, the profit of 1500 Cr is bad (Pl Refer Lehman Brothers or Citiban Balance Sheet approx 3-4 years back)
This was here to give you an actual picture before you start blaming everyone LEFT, RIGHT & CENTER...
Superb...
ReplyDelete