Petrol would be Rs 8 cheaper if additional VAT is removed
The price of petrol, which touched Rs90.85 a litre on Friday in the city, could have been Rs8 to 10 less, had the government reduced burden of additional value added tax (VAT), levied from time to time to tide over specific crises. The taxes were never reversed, even after the crisis situation normalized. The latest addition was of Rs2.12 in May 2020 to deal with Covid. TOI, with the help of Vilas Salpekar, managing committee member of Federation of All Maharashtra Petroleum Dealers’ Association (FAMPEDA), calculated rates of both petrol and diesel in the city. The calculations show that even as base price of diesel is higher than that of petrol, the latter is costlier due to extra taxes. This is because diesel is no longer subsidized. It was seen that additional VAT was charged at Rs10.12 a litre in case of petrol and Rs3 for diesel. Additional VAT is the tax that is levied in times of crisis. Sources said even after the crisis has ended the tax has been continued. Had earlier additional VAT been removed, and then only Covid VAT levied, petrol price would still have been cheaper by Rs8. According to the calculations, base price of petrol that reaches the depot at Nagpur comes to Rs28.03. The additions include freight, excise duty, dealers’ commission, VAT, additional VAT and tax collected at source. For diesel, the base price at depot comes to Rs29.01, and after all the additions, the final rate payable by the consumer came to Rs81.06 for Friday. This includes integrated road development cess of 65 paise on petrol and Rs1.85 on diesel levied for Nagpur. The rates vary slightly between retail stations of different companies. The price is slightly lower in outlets outside the municipal limits due to lower VAT being levied. The basic VAT is charged at 26% on petrol within the city limits and 25% outside. Its 24% and 21% respectively for diesel. The additional VAT is same. Salpekar calculated the base rate through reverse calculation. The dealers’ invoice has the bulk rate with central excise added. Other taxes are mentioned below to calculate the final retail price. For example, in petrol, the latest invoice shows price of Rs61,381 odd per thousand litres of petrol. This comes to Rs61.31 per litre, and after deducting the central excise it come to Rs28 odd a litre — which is the base price. Again after adding all the taxes, including excise and dealers’ commission, the retail price comes to Rs90.85. It goes the same way for diesel too. The base rate covers the initial price and the cost of transporting the petroleum from the depot at Mumbai to Nagpur. As the taxes remain same, the rate changes whenever the base rates are revised. In November end, the base rates were at Rs27 a litre for petrol, making it slightly cheaper. “The rising rates, however, do not bring any benefit to the dealers. The dealers have been demanding revision in commission since more than two years with letters sent to the PMO too. There has been no response yet,” said Salpekar. The commission is fixed at little over Rs3 a litre on petrol and Rs2.14 for diesel, he said. Traders activist BC Bhartia said, “If on one hand government wants anti-profiteering laws for businesses, then why should it not pass on the benefit to public by reducing taxes when not needed.”
Oil slips on demand worries as COVID-19 lockdowns tighten in Europe
Oil prices dipped in early trade on Tuesday, with demand worries due to tighter lockdowns in Europe outweighing relief from vaccination rollouts and concerns about a flare-up of tension in the Middle East. U.S. West Texas Intermediate (WTI) crude futures fell 16 cents, or 0.3%, to $46.83 a barrel at 0158 GMT, while Brent crude futures fell 20 cents, or 0.4%, to $50.09 a barrel, erasing half of Monday’s gains. London stepped up restrictions requiring bars and restaurants to close, as COVID-19 infection rates continued to rise sharply, which will dent fuel demand in the near term. Further marring the demand outlook, Italy said it was considering more stringent restrictions over the Christmas holidays, while most stores in Germany have been ordered to shut until Jan. 10, with little prospect of an easing early in the new year. However vaccination rollouts in the United States, Britain and Canada, which spurred a sharp rally in oil prices last week, continue to keep Brent above $50. “You’ve got demand recovery hopes based on the rollout of vaccinations, but increasing restrictions on the pandemic side,” said Commonwealth Bank commodities analyst Vivek Dhar. OPEC on Monday pared its forecast for the oil demand recovery in 202l by 350,000 barrels per day, due to the persistent impact of the coronavirus pandemic, but said a rapid rollout of vaccines in major economies “provides potential upside for next year’s growth forecast.” In a sign of weaker demand, analysts expect data from the American Petroleum Institute on Tuesday and the Energy Information Administration on Wednesday to show that U.S. gasoline inventories rose by 1.6 million barrels last week, while distillate inventories, which include diesel and heating oil, rose by 400,000 barrels. Oil prices found some support after a fuel transport ship at the Saudi Arabian port of Jeddah was hit by an explosion on Monday, which the energy ministry called a terrorist attack. That followed an attack on two oil wells in Iraq last week. “When you have the level of tension rising in the Middle East, you build in a bit of a premium in pricing,” Dhar said.
Clean fuel must for NCR units: Central Pollution Control Board
Central Pollution Control Board (CPCB) has directed Delhi Pollution Control Committee (DPCC) and state pollution control boards of Uttar Pradesh, Rajasthan and Haryana to allow only those new industrial units that use cleaner fuels in Delhi-NCR. The decision has been taken considering the deteriorating air quality. CPCB in its order to chairmen of DPCC, Uttar Pradesh Pollution Control Board, Rajasthan Pollution Control Board and Haryana Pollution Control Board said: “Considering the fact that already directions have been issued to all the existing industries in Delhi-NCR to switch over to cleaner fuels, it has been decided that only those new industrial units will be allowed to set up in Delhi-NCR, which use cleaner fuels, including natural gas (CNG/PNG), liquefied petroleum gas, biogas, propane and butane.” CPCB has asked the pollution control boards and the committee to exercise their powers conferred under Section 18 (1)(b) of Air (Prevention and Control of Pollution) Act, 1981. It has also sought an action taken report within 30 days. A DPCC official said, “Delhi government modified rules in 2018 under which only those industries will be given consent by DPCC that use cleaner fuels. Nearly 65-70 units in Delhi are in the process of converting to cleaner fuels while 20 other units in two industrial units are waiting for cleaner gas supply.” During a meeting of high-level taskforce in December 2018, CPCB had decided that all industries in Delhi-NCR where gas supply was available should switch to PNG. CPCB in July 2019 had asked DPCC and SPCBs of NCR-Delhi to close down all industrial units in Delhi-NCR where PNG supply was available and industry had not shifted to PNG. However, after receiving a number of representations from industry associations expressing concerns on cost viability and time period needed for such conversion, CPCB told state pollution control boards of Rajasthan, Uttar Pradesh and Haryana that while their representations were being examined, coercive action might not be initiated at this stage against the industrial units in NCR, which otherwise were following the prescribed environment norms. In its order, CPCB said that industries located in 24 districts of Delhi, Uttar Pradesh, Haryana and Rajasthan had been discharging environmental pollutants directly or indirectly into the ambient air.
BPCL bid evaluation meet on Tuesday; Vedanta, Apollo Global, I Squared Capital arm in race
A high-powered committee will on Tuesday evaluate preliminary bids received from mining-to-oil conglomerate Vedanta and private equity firms Apollo Global and I Squared Capital’s arm Think Gas for buying the government’s 52.98 per cent stake in BPCL, sources said. Last week, an inter-ministerial meet was held to discuss the BPCL valuation process and setting of the reserve price. On Tuesday, the panel will see transaction advisor Deloitte’s report on the scrutiny of the three bids that were received at the close of bidding last month, sources in know of the development said. The Ministry of Petroleum and Natural Gas, the parent ministry of Bharat Petroleum Corporation Limited (BPCL), has been asked to give its views on the response and the process so far. A special purpose vehicle floated by the BSE-listed Vedanta Ltd and its London-based parent Vedanta Resources submitted an expression of interest (EoI) before the close of deadline on November 16. While I Squared Capital is a private equity firm focusing on global infrastructure investments, New York-based Apollo Global Management, Inc is a global alternative investment manager firm. I Squared Capital invests in energy, utilities, transport and telecom projects in North America, Europe and select high growth economies such as India and China. The government is selling its entire 52.98 per cent stake in India’s second largest fuel retailer as part of plans to raise a record Rs 2.1 lakh crore from disinvestment proceeds in 2020-21 (April 2020 to March 2021). But share price of BPCL has plunged by nearly a fifth since the time the strategic sale was approved in November last year. At Monday’s closing price of Rs 405.75 on BSE, the government’s 52.98 per cent stake in BPCL is worth just over Rs 46,600 crore. Also, the acquirer would have to make an open offer for buying another 26 per cent stake from the public, which would cost about Rs 22,800 crore. Vedanta’s interest in BPCL stems from its USD 8.67 billion acquisition of oil producer Cairn India nearly a decade back. The company produces oil from oilfields in Rajasthan which are used in refineries such as those operated by BPCL to turn them into petrol, diesel and other fuels. The government had at the close of bidding stated that “multiple” EoIs had been received. It, however, did not reveal the identity of the bidders. Tuhin Kanta Pandey, secretary, Department of Investment and Public Asset Management (DIPAM), which is handling the strategic sale, had tweeted on November 16 that the transaction advisors for the sale of government’s 52.98 per cent stake in BPCL have reported receiving “multiple expressions of interest.” “The transaction will move to the second stage after scrutiny by TA,” he had said. TA stands for transaction advisor. “Strategic disinvestment of BPCL progresses: Now moves to the second stage after multiple expressions of interest have been received,” Finance Minister Nirmala Sitharaman had also tweeted on the same day. Sources said the transaction advisor’s job was to evaluate the bidders to ascertain if they meet the qualifying criteria and have the financial muscle to do the acquisition. BPCL will give the buyer ownership of around 15.33 per cent of India’s oil refining capacity and 22 per cent of the fuel marketing share. BPCL operates four refineries in Mumbai (Maharashtra), Kochi (Kerala), Bina (Madhya Pradesh), and Numaligarh (Assam) with a combined capacity of 38.3 million tonnes per annum, which is 15.3 per cent of India’s total refining capacity of 249.8 million tonnes. While the Numaligarh refinery will be carved out of BPCL and sold to a PSU, the new buyer of the company will get 35.3 million tonnes of refining capacity — 12 million tonne Mumbai unit, 15.5 million tonne Kochi refinery and 7.8 million tonne Bina unit. It also owns 17,355 petrol pumps, 6,159 LPG distributor agencies and 61 out of 256 aviation fuel stations in the country. BPCL is India’s second-largest oil marketing company with a standalone domestic sales volume of over 43.10 million tonnes and a market share of 22 per cent during FY20. It is India’s sixth largest company by turnover. Its petrol pumps sell more fuel than the industry average — BPCL pumps sell 124 kilolitres per month as compared to the industry average of 116, according to the company website. The firm also has upstream presence with 26 assets in nine countries such as Russia, Brazil, Mozambique, the UAE, Indonesia, Australia, East Timor, Israel and India. It is also making a foray into city gas distribution and has licences for 37 geographical areas (GAs).
Torrent Gas in pact with Tamil Nadu to invest Rs 5,000 cr on city gas distribution infra
Torrent Gas has signed an agreement with the government of Tamil Nadu, committing to invest Rs 5,000 crores for the development of city gas distribution infrastructure in the state. Torrent Gas was earlier authorised by Petroleum and Natural Gas Regulatory Board (PNGRB) to provide Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) in Chennai and Thiruvallur districts in the state. “This investment of Rs 5,000 Crores by Torrent Gas in development of CGD infrastructure is expected to have a major impact on the socio-economic development of the region by attracting fresh investment in the state which requires availability of natural gas as a prerequisite, improving the competitiveness of existing industries using natural gas and increased savings for families and small businesses using CNG and natural gas. The investment will also provide direct and indirect employment to more than 5,000 people,” Jinal Mehta, director, Torrent Gas, was quoted as saying in a statement. Torrent Gas will be laying pipelines and other requisite infrastructure in Chennai and Thiruvallur districts over an area of 3,569 square kilometers to provide PNG connections to homes, industries and commercial establishments and CNG to vehicles. As part of the first phase of the infrastructure roll-out, the company aims to commission over 30 CNG stations in Chennai and Thiruvallur districts in the last quarter of the current financial year. Torrent Gas has recently commissioned the first CNG station at Nagapattinam in Tamil Nadu and started the work of laying the pipelines. In an interview to ET in October, Mehta had said that the Ahmedabad-headquartered Torrent Group aims to hit the capital markets with an initial public offering of its gas utilities business, Torrent Gas, by financial year 2023-24.
India and LNG supplier Qatar set up task force to identify projects for investment
India and its biggest LNG supplier Qatar on Friday agreed to set up a task force to identify projects in India for investment by the gas-rich Gulf nation, Oil Minister Dharmendra Pradhan said. India imports 8.5 million tonnes per annum of gas in its liquid form (LNG) from Qatar under a long-term contract. It also buys LPG to meet the fast-expanding cooking gas requirements in the country. “Had a telecall with HE Saad Sherida Al-Kaabi, Qatar’s Minister of State for Energy Affairs and President & CEO Qatar Petroleum on promoting Qatari investments in the entire energy value chain in India,” Pradhan tweeted. The call, he said, was a follow-up to Prime Minister Narendra Modi’s discussion with the Emir of Qatar, Sheikh Tamin bin Hamad Al-Thani on December 8. “Minister Al-Kaabi and I have agreed to set up a Task Force on Energy, represented by VP of Qatar Petroleum and a senior officer from @PetroleumMin to identify specific projects in India’s energy sector for Qatari investments,” he said. Qatar Petroleum, the national oil company of the Gulf nation, will be represented by the vice president (VP) in the task force, while the Indian side would be represented by a senior official from the Ministry of Petroleum and Natural Gas. “I reiterated Qatar’s role as a reliable supplier of LNG and LPG. We also agreed to further strengthen cooperation in the energy sector and move beyond the buyer-seller relationship to a comprehensive one, including two-way investments,” Pradhan said. During the December 8 call between Modi and the Emir of Qatar, the two nations had agreed to create a special task force to explore and facilitate Qatari investments in India, including in the energy sector. Cash-rich Qatar Investment Authority is looking to invest in India, particularly in the energy and infrastructure sector. India is the world’s third-largest oil and LNG importer. At the beginning of this year, India asked Qatar for renegotiation of its long-term supply contract, but the Gulf state was not inclined to renegotiate the prices. India wants to significantly boost its gas consumption and expand its gas infrastructure. An investment of USD 66 billion is lined up in developing gas infrastructure which includes pipelines, city gas distribution and LNG re-gasification terminals, Pradhan had said earlier this month. Qatar, for its part, sees LNG as an important part of India’s plans to increase its gas-based economy. India is targeting to raise the share of natural gas in its energy basket to 15 per cent by 2030 from the current 6.3 per cent. During Prime Minister Modi’s visit to Doha in June 2016, India had sought Qatari investment in India’s oil and gas exploration and production as well as its participation in the building of the second phase of strategic oil reserves.
Asian LNG prices rise to over two-year high driven by heating demand
Asian spot prices for liquefied natural gas (LNG) rose this week to the highest since Sept. 2018 due to high demand for heating, a supply crunch and increasing freight rates, trade sources said. The average LNG price for January delivery into northeast Asia was estimated at around $11.10 per million British thermal units (mmBtu), up $3.00 from the previous week, the sources said. Prices for February delivery were estimated at around $10.50 per mmBtu. Temperatures in Beijing, Tokyo and Seoul are expected to be lower than average over the next two weeks, weather data from Refinitiv Eikon showed, increasing gas demand for heating. The rise in imports in China, as the economy recovers, and the lack of shipping availability is also helping to push prices up, the sources said. “LNG imports by China hit a one-year high in November and are set to increase further, raising demand” a London-based trader said. PetroChina and China National Offshore Oil Corp (CNOOC) said on Friday they will invite global bids for LNG in Shanghai. A recent tender by Pakistan LNG to buy six spot cargoes for January only garnered interest for half of the requirements, showing how tight the supply situation is, sources said. Production issues in Australia and Malaysia, two of the top four largest exporters, and delays in the Panama Canal, through which U.S. ships part of its liquefied gas, are adding to tighter supply. Prices are expected to stabilize in the second half of January with record volumes coming from the U.S, where natural gas prices are below $3, making exports profitable, traders said. LNG prices in Asia have increased by more than a five-fold since June, when lower demand due to the coronavirus pandemic drove them below $2.00/mmBtu.
India’s fuel demand fell 5 per cent in November: Oil ministry data
India’s fuel demand fell 5 per cent in November compared with the same month last year. Consumption of fuel, a proxy for oil demand, totalled 17.83 million tonnes, data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry showed. Sales of gasoline, or petrol, were 5.2 percent higher from a year earlier at 2.67 million tonnes. Cooking gas or liquefied petroleum gas (LPG) sales increased 3.5 percent to 2.35 million tonnes, while naphtha sales surged 7.3 percent to 1.35 million tonnes. Sales of bitumen, used for making roads, were 25.1 per cent up, while fuel oil use edged up 4.4 per cent in November.
Oil Marketing Companies continue to hold petrol, diesel price rise
Oil marketing companies continued to hold back any change in the retail price of petrol and diesel continuing with their wait and watch stance that has kept the prices of the two auto fuels static for the past seven days. Accordingly, there was no change in the retail price of auto fuels on Monday with the price of petrol remaining at Rs 83.71 a litre and diesel Rs 73.87 a litre in Delhi. Across the country as well the price of the two petroleum products remained unchanged. OMCs have gone on a pause mode at a time when the news of successful coronavirus and expectations of big pick up in demand had kept crude on the boil with prices breaching $ 50 a barrel mark. Crude, however, has remained static for the past few days reducing any pressure on upward revision in the fuel prices. Petrol price was very close to breaching the all time high level of Rs 84 a litre (reached on October 4, 2018) when it touched Rs 83.71 a litre on Monday. But the march has been halted ever since then with no price revision by the OMCs. Global crude prices have risen almost $ 10 a barrel in the last one month to reaching over $ 50 a barrel now. But even at this level, it is far less than than average crude price of $ 80.08 a barrel in October 2018 when petrol prices reached highs of Rs 84 a litre in the national capital. With Monday’s pause, fuel prices have now increased on 15 of the past 25 days with petrol prices rising by Rs 2.65 per litre and diesel by 3.41 a litre. Petrol price had been static since September 22, and diesel rates hadn’t changed since October 2. Though the retail pricing of petrol and diesel has been deregulated and oil marketing companies were following a daily price revision formula, the same was suspended for almost two months to prevent volatility in international oil markets from impacting fuel prices regularly during the pandemic.
U.S. crude stocks soar 15 mln bbls amid record surge in net imports -EIA
U.S. crude oil stockpiles last week surged the most since April, jumping more than 15 million barrels, as imports rose and exports plunged, the Energy Information Administration said on Wednesday. The unexpected supply build and record rise in net imports stunned the oil market, which has been weighed down by low demand due to the coronavirus pandemic. “It defies the math that is in the market, for sure,” said Bob Yawger, director of Energy Futures at Mizuho in New York. “Do U.S. refiners, at a time when they’re closing refineries, need to increase imports by a million barrels a day? That’s ridiculous.” Crude inventories rose by 15.2 million barrels in the week to Dec. 4 to 503.2 million barrels, the EIA said, compared with analysts’ expectations in a Reuters poll for a 1.4 million-barrel drop. Net crude imports rose by a record high of 2.7 million barrels per day, the EIA said. That boosted U.S. Gulf Coast stocks by 11.8 million barrels, the most in one week ever, according to EIA data. U.S. crude exports plunged by 1.6 million bpd to just 1.8 million bpd, the lowest since 2018, while imports rose 1.08 million bpd. Crude markets gave up early gains on the news, with U.S. crude and global benchmark Brent changing course to trade lower. U.S. crude settled 8 cents lower at $45.52 a barrel, after touching a session low of $44.95 a barrel. Gasoline and distillate stocks were also higher, causing U.S. gasoline futures to pare gains as heating oil futures turned negative. Gasoline stockpiles rose by 4.2 million barrels in the week to 237.9 million barrels, the EIA said, compared with expectations for a 2.3 million-barrel rise. Distillate stockpiles, which include diesel and heating oil, rose by 5.2 million barrels in the week to 151.1 million barrels, versus expectations for a 1.4 million-barrel rise, the EIA data showed. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 1.4 million barrels in the last week, EIA said. Refinery crude runs rose by 424,000 bpd, as refinery utilization rates rose by 1.7 percentage points, the EIA said.