June 29, 2010 - India June 25 deregulated the price of gasoline, and raised the retail price of gasoline, gasoil, LPG and kerosene, oil secretary S. Sundareshan said in a briefing broadcast on television.
The price of gasoline would be market-driven at the refinery gate as well as at the retail level, Sundareshan said, adding that gasoil prices also would be deregulated in due course.
Gasoline prices would go up by Rupees 3.5/liter ($0.075) following the deregulation.
The government has also decided to raise gasoil prices by Rupees 2/liter ($0.043), Sundareshan said. The highly subsidized cooking and home lighting fuel kerosene would go up by Rupees 3/liter while LPG would be Rupees 35/cylinder dearer from midnight June 25, the secretary announced.
Before the June 25 announcement, gasoline in Delhi retailed at Rupees 47.93/liter ($1.03) and gasoil at Rupees 38.10/l, according to information on the web site of state-owned refiner Indian Oil Corporation.
A top-level ministerial group called the Empowered Group of Ministers, or EGOM, took the decisions after considering recommendations made by an expert panel in February headed by Kirit Parikh, former member of the Planning Commission.
The government has eyed freeing gasoline and gasoil prices as a way to bring down its fuel subsidy burden, pave the way for private-sector refiners to compete in fuel retailing, and spur investment in the downstream sector.
State-owned refiners lost Rupees 460 billion ($9.8 billion) in the fiscal year ended March 2010, selling refined fuels at less than market rates.
While state upstream companies contributed Rupees 142 billion as discounts on crude purchase to the refiners, the government announced a subsidy grant of Rupees 260 billion.
The three refiners had to absorb the uncovered loss of Rupees 50 billion.
State refiners to avoid $4.7 billion loss
With deregulation and higher prices, state-owned refiners will escape a projected loss of Rupees 220 billion ($4.7 billion) for the remaining part of financial year 2010-2011, by moving over to market-driven pricing, the oil ministry said June 25.
However, the ministry estimates that the subsidy burden for the full fiscal year on the four hitherto subsidized petroleum products -- gasoil, gasoline, kerosene and LPG -- would still be Rupees 530 billion, even after the price hike and decontrol.
Deregulation will reduce IOC?s under-recoveries and borrowings, as well as give certainty of cash flows, Chairman B.M. Bansal told a television channel.
Private refiner Essar Oil said it would quicken the pace of its retail expansion. "As the largest active private sector fuel retailer in India, we are well placed to capture additional sales for fuel and non-fuel items and expect to see significant volume growth in both areas," Essar Oil CEO Naresh Nayyar said in a statement.
Essar Oil has 1,342 operational fuel outlets and plans to expand to 1,700 by March 2011.
Private refiners were forced to cut down on retail sales, especially since around 2007, as the government put a lid on retail prices despite spiralling international oil prices and subsidized the state-owned refiners.
Reliance Industries has 1,400 pump stations, of which only 600 are currently operational.
Shell India has around 70 outlets spread over five states.
The government will intervene to moderate prices if there is a share increase in the market, Sundareshan said June 25.
The retail prices of gasoline and gasoil were last revised when Euro IV and Euro III standard fuels were introduced in the country, in April this year.
Before that, prices moved up in February, when the 2010-2011 budget imposed a 5% import tax on crude oil, reversing the zero import tax regime introduced in June 2008, hiked import taxes on both gasoline and gasoil to 7.5% from 2.5%, and raised the excise duty -- a tax on goods produced within the country -- on gasoline and gasoil by Rupee 1/l.
The price of gasoline would be market-driven at the refinery gate as well as at the retail level, Sundareshan said, adding that gasoil prices also would be deregulated in due course.
Gasoline prices would go up by Rupees 3.5/liter ($0.075) following the deregulation.
The government has also decided to raise gasoil prices by Rupees 2/liter ($0.043), Sundareshan said. The highly subsidized cooking and home lighting fuel kerosene would go up by Rupees 3/liter while LPG would be Rupees 35/cylinder dearer from midnight June 25, the secretary announced.
Before the June 25 announcement, gasoline in Delhi retailed at Rupees 47.93/liter ($1.03) and gasoil at Rupees 38.10/l, according to information on the web site of state-owned refiner Indian Oil Corporation.
A top-level ministerial group called the Empowered Group of Ministers, or EGOM, took the decisions after considering recommendations made by an expert panel in February headed by Kirit Parikh, former member of the Planning Commission.
The government has eyed freeing gasoline and gasoil prices as a way to bring down its fuel subsidy burden, pave the way for private-sector refiners to compete in fuel retailing, and spur investment in the downstream sector.
State-owned refiners lost Rupees 460 billion ($9.8 billion) in the fiscal year ended March 2010, selling refined fuels at less than market rates.
While state upstream companies contributed Rupees 142 billion as discounts on crude purchase to the refiners, the government announced a subsidy grant of Rupees 260 billion.
The three refiners had to absorb the uncovered loss of Rupees 50 billion.
State refiners to avoid $4.7 billion loss
With deregulation and higher prices, state-owned refiners will escape a projected loss of Rupees 220 billion ($4.7 billion) for the remaining part of financial year 2010-2011, by moving over to market-driven pricing, the oil ministry said June 25.
However, the ministry estimates that the subsidy burden for the full fiscal year on the four hitherto subsidized petroleum products -- gasoil, gasoline, kerosene and LPG -- would still be Rupees 530 billion, even after the price hike and decontrol.
Deregulation will reduce IOC?s under-recoveries and borrowings, as well as give certainty of cash flows, Chairman B.M. Bansal told a television channel.
Private refiner Essar Oil said it would quicken the pace of its retail expansion. "As the largest active private sector fuel retailer in India, we are well placed to capture additional sales for fuel and non-fuel items and expect to see significant volume growth in both areas," Essar Oil CEO Naresh Nayyar said in a statement.
Essar Oil has 1,342 operational fuel outlets and plans to expand to 1,700 by March 2011.
Private refiners were forced to cut down on retail sales, especially since around 2007, as the government put a lid on retail prices despite spiralling international oil prices and subsidized the state-owned refiners.
Reliance Industries has 1,400 pump stations, of which only 600 are currently operational.
Shell India has around 70 outlets spread over five states.
The government will intervene to moderate prices if there is a share increase in the market, Sundareshan said June 25.
The retail prices of gasoline and gasoil were last revised when Euro IV and Euro III standard fuels were introduced in the country, in April this year.
Before that, prices moved up in February, when the 2010-2011 budget imposed a 5% import tax on crude oil, reversing the zero import tax regime introduced in June 2008, hiked import taxes on both gasoline and gasoil to 7.5% from 2.5%, and raised the excise duty -- a tax on goods produced within the country -- on gasoline and gasoil by Rupee 1/l.
