-- Pricing Methodology of Petrol & Diesel in India
Petrol and diesel in India are priced on the basis of their import parity prices, i.e. the cost that the oil marketing would have had to pay, if they were importing. So for e.g.
- Cost of petrol in Dubai: Rs.20 per litre.
- Cost of transportation from Dubai to India: Rs.2 per litre
- Import duty on Petrol: 10%
Adding these would give us a price of Rs.20 + 2 + 2.2 = Rs.24.2 per litre as the fully paid-for import price. This is called as the import parity price. However, this is not the price at which petrol and diesel are sold in India. There are a host of internal costs involved. Some of them include:
- Marketing costs
- Retail pump outlet charges
- Internal freight costs
- Stock loss
- Marketing margin to the Oil marketing companies
- Fixed return on working capital
- terminalling charges, etc.
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