It is about the fuel pricing mechanism in India which is proposed by Mr.Rangarajan Committee in 2013.

1. Fuel Pricing Mechanism in
India
BY
B.RANJANI
3/19/2016

2. Crude oil Price In India
 1 Barrel crude oil price is $40.45
 1 Dollar is 66.56 rupees.
 A barrel measures 159 litres. So
(40.45*66.56)/159 works out to 16.933
in Rupees per litre of crude oil.
3/19/2016

3. Petrol and Diesel Price In
India
As per Indian Oil Corp (IOC), the nation's
largest oil company, said.
 Petrol in Delhi will cost Rs 66.90 per litre.
 A litre of diesel will cost Rs 49.72 per
litre,
3/19/2016

4. Why price differs between
companies?
 Indian Oil Corporation,Hindustan
Petroleum and Bharat Petroleum are the
Oil Marketing Companies(OMC) which
import and market oil in India.
 The price of oil these companies quote in
India is the price quoted on the
Singapore Exchange.
 So the price these companies quote is
not the actual cost of oil in India. It is
rather the price of oil in Singapore.
3/19/2016

5. • 1974-1998: Administrative price
mechanism
• 1998-2006: Import Parity Price
Mechanism
• 2006-Present: Trade Parity Price
Mechanism
Evolution of Pricing System in
India
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6. Administered Price Mechanism
(APM)
 It is involved artificial price fixing by
the government from time to time and
hike or reduction in the prices become
a political decision, rather than being a
rational economic decision.
 The price is determined by the market
forces of demand and supply.
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7. Import Parity Price (IPP)
1. Free on Board Price (FOB) as quoted in Arab
Gulf Market and reported by Platt and Argus,
2. Premium/ discount as published in Platt and
Argus
3. Ocean freight from mid port in the Arab Gulf to
Indian Ports
4. Insurance
5. Exchange rate
6. Custom Duty
7. Ocean Loss
8. Wharfage and Port charges.
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8. Export Parity Price (EPP)
 Represents the price which oil
companies would realize on export of
petroleum products.
 This includes FOB price + Advance
License benefit or ALB for duty free
import of crude oil pursuant to export of
refined products. Consequent to abolition
of Customs Duty of Crude oil effective
25.06.2011, the ALB is currently zero.
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9. Trade Parity Price (TPP)
3/19/2016
TPP consists of 80% of Import Parity Price and
20% of Export Parity Price.

10. Thank You
3/19/2016