Nil subsidy and higher tax drive up fuel price says IOC
Business Line, Delhi   22-Sep-2020

Consumers are getting a raw deal with the price of auto fuel and cooking gas being on the higher side. But this is on account of significant taxation and nil subsidy, according to IndianOil.

Speaking to reporters after the 61st Annual General Meeting of the shareholders, IndianOil Chairman Shrikant Madhav Vaidya said that the retail price of petrol and diesel is higher on account of Central and State taxes.

Commenting on the steep price of cooking gas, Gurmeet Singh, Director (Marketing) said, “The price of a subsidised domestic LPG (Liquified Petroleum Gas or cooking gas) cylinder is now Rs 594 per 14.2 kilogram.” There is nil subsidy from the Centre at this price point, Singh added.

In response to a follow-up question on the price point at which the subsidy would once again kick in, Singh said, “That will depend onthe price at which we buy LPG.”

At the present price point, 63.52 per cent of the petrol price and 58.56 per cent of diesel price in the national capital comprises of State and Central levies. The Centre has also steadily eliminated cooking gas subsidy for most consumers as the price of LPG in the international market has fallen.

There is still some support from the government for a section of LPG consumers. These 8 crore consumers (out of total 27 crore) fall under the Pradhan Mantri Ujjwala Yojana (PMUY) net. To aid them during the Covid-19 crisis, the oil companies disbursed Rs 9,670.41 crore into their bank accounts.

This amount was meant to be usedto buythree cooking gas cylinders for each PMUY household.

State and Central levies accounted for 63.52 per cent of the petrol price and 58.56 per cent of diesel price in the National Capital region

It was estimated that 1,421.37 lakh cylinders will be bought through these disbursals. Till now, 1,367 lakh cylinders have been bought and some 53.89 lakh cylinders are remaining. This leaves an amount of Rs 353 crore that is pending with PMUY beneficiaries.

Fund diversion

IndianOil has also found that some of the amount parked in the accounts of PMUY consumers for buying cylinders has been withdrawn and used for other activities by beneficiaries.

"Such beneficiaries who have diverted the amount will have to buy their next cylinders at market price,” Singh said.

Commenting on the disbursals, Vaidya said, “IndianOil has supplied 6.12 crore refills to beneficiaries of Pradhan Mantri Garib Kalyan Yojana till September 11, 2020. The scheme has been extended till September 30, 2020 for those customers who have already received the advance amount but are yet to avail of the refill.”

Vaidya also said that IOCL has launched a differentiated LPG with the brand name Indane ‘Xtra Tej’ this month for non-domestic customers. This is expected to yield approximately 5-8 per cent savings in fuel consumption over normal LPG.

Commentingonthediversification of crude oil sourcing, Vaidya said that IOCL will be importing 2 million tonnes per annumfrom the US.