I have made a small
study of World Petroleum prices and the findings are interesting. Venezuela is
the country where petrol is available cheapest at USD 0.01 or just 1 cent which
is unbelievable. They might as well give it free instead.
At the highest end is
Hong Kong where Petrol is priced at 1.91 USD. But as per Hong Kong's purcahsing
power this price is peanuts because its PPP per capita is 57000 USD comapred to
6101 for India.
In India and
neigbouring countries petrol is priced highest in Bangladesh at USD 1.08 and
the cheapest is Afganistan at 0.69 USD. India has a 1.05 and stands 2nd
most expensive after Bangladesh in the region.
If we normalize the
petrol prices as per the per capita PPP of different countries then apart form
Venezuela, Saudi Arabia, Qatar and Bahrain which are high oil producing
countries per capita, the cheapest
petrol in the world would be that of US.
I have figures for Nov
15 when Petrol in Delhi was priced at Rs 60.70 per liter.
PETROL
1 Cost of production at refinery 24.75
2 Company margin& other costs
2.49
Excise duty 19.06---31.40%
4Dealer commission 2.26
5VAT 12.14---20%
TOTAL 60.70 Taxation—51.4%
DIESEL
Cost of production at refinery 24.86
Company margin& other costs 2.19
3 Excise duty 10.66—23.20%
4Dealer commission 1.43
5VAT 6.79---14.80%
TOTAL 45.93
Taxation—38%
As both Central Excise
& VAT are calculated ad valorem, the more the crude prices go up the more
revenue Government gets without putting in any effort and they can always claim
it is not they who raised the prices but the oil companies. A very comfortable
excuse indeed. Whenever the price drops the Government increases the duties and
mops up revenue while passing only a minuscule amount to the consumer.
As per the figures the petroleum
product fuel use in India rose to 96.40 million MT in the year ending March
2016. In this petrol usage is 21.8 million MT and Diesel 74.6 million MT. The
density of Petrol and Diesel is around 0.75. Thus this translates into 29,067
million litres of petrol and 99,467 litres of Diesel.
The revenue to the
Governments on these is shown below when the rates are assumed as shown above:
PETROL
1. Total cost Rs 1,76,437 crores.
2. Excise 31.40% Rs 55,401 crores
3. VAT 20% Rs 35,287 crores
DIESEL
1. Total Cost Rs 4,56,852 crores
2. Excise 23.20% Rs
1,05,989 crores
3. VAT 14.80% Rs
67,614 crores
If we combine both the
Diesel and Petrol taxation, the Center is richer by 1,61,390 crores on account
of Excise and the state is richer by 1,02,901 crores on account of VAT. The
total taxation on both these commodities aggregate to Rs 2,64,291 crores for
the FY 2015-16.
Total indirect taxes
collected for 2015-16 by Central Government is Rs 7,03,642 crores comprising of Excise, Customs & Service Tax.
The following is the
tax revenue of the Central Government for the year 2015-16 excluding taxes on
Union Territories.
1. Corporate Tax 4,52,970
crores
2. Income Tax 2,99,051
3. Customs 2,09,500
4. Excise Duty 2,84,142
5. Service Tax 2,10,000
TOTAL 14,55,663 crores
It can be seen that
Excise duties on Petroleum products alone account for as much as 93% of the
total excise duties collected.
If the rate of petrol
and diesel goes up by a mere Rs 1 per liter then 29067 million litres of petrol
would yield an additional revenue of Rs 1,494 crores to the Central & State
Governments together. On Diesel of 99,467 million litres this would yield Rs
3780 croes. Thus the total additional revenue to both the center and states would be Rs 5274 crores.
Look at the petroleum
product pricing in India. The Government is taking the people for a big ride on
account of petrol price deregulation. The prices of petrol should essentially
follow the International prices of crude as well as USD fluctuation but this
does not seem to be the case in India. Look at the following chart. The petrol
prices were deregulated in the month of June 2010. Since then the prices of
crude oil as against petrol prices in India are given in the chart. Petrol
prices are taken as per Delhi rates.
1.S.No
|
2.Month
|
3.Crude Price
per barrel USD
|
4.USD/INR
rate
|
5.Price oer liter without taxes & expenses
|
6.Petrol
Price Rs
|
7.Govt price as times of actual pr.Col 6/5
|
1
|
Dec 2010
|
91
|
44.70
|
25.58
|
56
|
2.19
|
2
|
Dec 2011
|
100
|
53.06
|
33.37
|
66
|
1.98
|
3
|
Nov 2012
|
85
|
54.26
|
29.01
|
67
|
2.31
|
4
|
Dec2013
|
99
|
61.86
|
38.52
|
71
|
1.84
|
5
|
Dec 2014
|
53
|
63.19
|
21.06
|
61
|
2.90
|
6
|
Dec 2015
|
37
|
66.20
|
15.41
|
60
|
3.89
|
7
|
Dec 2016
|
53
|
67.90
|
22.63
|
69
|
3.05
|
The pricing looks
totally illogical with both the Central and the state governments making merry
with taxation whenever there is a dip in price but they never bother to bring
down the duties later when the prices go up. Despite the so called
deregulation, there is absolutely no linkage between the price of crude oil and
petroleum prices and there is no pattern whatsoever in its pricing. This
Government takes so much of pride in telling people that it has curtailed the
revenue deficit but that had been possible only because of increased revenues
from taxation on petroleum products and curtailment of subsidies and not
because of any cut in other Government expenditure. But yes, the Government has
been successful in curtailing subsidies effectively.
With the OPEC going in
for production cuts on crude which they had stopped doing for the past 7 years,
the crude oil prices are likely to go up further in future and the people would end up paying much more than what they
did when the oil was at around 62 USD per barrel in Dec 2013.
As can be seen from the
table the prices of crude were down to 37 USD in Dec 2015 and at the rate of
USD then a liter of petrol without taxes was Rs 15.41 but the people ended up
paying Rs 60 or around 4 times that amount.
The table mentions only
petrol prices, but a similar situation exists for Diesel as well.
