LOK SABHA
UNSTARRED QUESTION NO. 1305
TO BE ANSWERED ON 24TH JULY, 2017
1305. SHRI ANANTKUMAR HEGDE:
SHRI PINAKI MISRA:
SHRI E.T. MOHAMMED BASHEER:
SHRI R. PARTHIPAN:
SHRI KIRTI AZAD:
Will the Minister of PETROLEUM AND NATURAL GAS be pleased to state:
(a) whether petrol and diesel have been/are being sold to consumers in proportion to international crude oil prices during the last three years and the current year and if so, the details thereof;
(b) the revenue and profit earned by the public sector oil companies from the sale of petrol and diesel by taking advantage of low international crude oil prices during the said period, company-wise;
(c) whether gas is not sold to consumers on the above basis and if so, the reasons therefor along with the criteria/ formula for fixing the consumer sale prices of gas in the country;
(d) whether the daily pricing practice is aimed to bring the country at par with the United States of America oil market and private retailers are also switching to the new pricing mechanism and if so, the details thereof along with any guidelines for private retailers issued by the Government after the de-control of petroleum products including petrol and diesel in the country;
(e) whether the Government monitors the prices of various petroleum products including petrol and
diesel fixed by the priva
ANSWER
MINISTER OF STATE (I/C) IN THE MINISTRY OF PETROLEUM AND NATURAL GAS
(SHRI DHARMENDRA PRADHAN)
(a) & (b): Prices of Petrol and Diesel have been made market-determined effective 26.06.2010 and 19.10.2014 respectively. Since then, the Public Sector Oil Marketing Companies (OMCs) take appropriate decision on pricing of Petrol and Diesel in line with international product prices and other market conditions. Retail Selling Price (RSP) of Petrol and Diesel in the country are not linked to the international crude oil prices but are linked to the international prices of Petrol and Diesel and at present public sector OMCs apply Trade Parity Pricing methodology to compute the RSP.
Refining of crude oil is a process industry, where crude oil constitutes around 90% of the total cost. Crude oil is processed through several processing units. Each of these units produces intermediate products streams, which require further reprocessing and blending. As it is difficult to apportion the total cost amongst individual refined products, product-wise costs are not identified separately
However the revenue and Profit after Tax of the OMCs from all activities during the last three years is given as under:-
Particulars 2014-15 2015-16 2016-17
Turnover
IOC 4,36,390 3,49,321 4,38,692
HPC 2,06,380 1,79,281 2,13,489
BPC 2,37,905 1,89,098 2,41,859
PAT
IOC 5,273 10,399 19,106
HPC 2,733 3,863 6,209
BPC 5,085 7,432 8,039
(c): The natural gas is sold as per formula used to determine the price of domestic natural gas notified under the New Domestic Natural Gas Pricing Guidelines, 2014 include the following:
Prices prevailing in HH (USA), NBP (UK), Alberta (Canada) and Russia are used as inputs to determine the price of domestic natural gas, as per the following formula:
P= (VHH*PHH+VAC*PAC+VNBP*PNBP+VR*PR)
(VHH+VAC+VNBP+VR)
Where,
P= Wellhead gas price
VHH= Total Annual volume of Natural Gas consumed in United States and Mexico
VAC= Total Annual volume of natural gas consumed in Canada
VNBP= Total Annual volume of natural gas consumed in EU and FSU excluding Russia
VR= Total Annual volume of natural gas consumed in Russia
PHH= Annual average of daily Henry Hub prices
PAC= Annual average of monthly Alberta Market Price
PNBP= Annual average of daily NBP UK prices
PR= Annual average of monthly prices of Russia PHH, PAC, PNBP and PR shall be calculated after deducting the US$ 0.50/MMBTU towards transportation and treatment charges.
Domestic price of natural gas is linked to the prices at major international hubs and tries to balance the interests of producers as well as consumers. The pricing of domestic natural gas is determined based on aforesaid formula on six monthly basis, which is applicable to all the sectors uniformly, except those specified in the Guidelines. These Guidelines are available on Ministry’s website.
(d): As mentioned above, prices of Petrol and Diesel have been made market determined and Public Sector OMCs take decision on pricing themselves. Public Sector OMCs, namely,
Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited and Bharat Petroleum Corporation Limited have implemented daily revision of retail selling price of Petrol and Diesel in the entire country effective 16th June, 2017.
Daily price revisions of Petrol and Diesel make the retail prices more reflective of the current market conditions, minimizing the volatility in the RSP of Petrol and Diesel. Further, it leads to increased transparency in the system and enables smoother flow of products from refinery/depots to Retail Outlets.
(e) & (f): The private oil companies decide themselves the prices of Petrol and Diesel being sold from the Retail outlets run by them.