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Journalism of Courage
Soon the price you pay for petrol and diesel could depend on your geographical location—how far you are from a refinery or a port from where your city gets the fuel.
Ostensibly to “stave off competition” from private players, the Petroleum Ministry has proposed that coastal locations will pay less for petrol and diesel as compared to the rest of the country with the government planning to transfer the actual freight cost to the consumers.
According to this proposal—pending clearance by Petroleum Minister Ram Naik—the hike will be calibrated. Prices will change each fortnight until the freight cost of moving the fuel to the location is absorbed in the consumer price.
Currently, the Government distributes transport costs uniformly among all consumers irrespective of their distance from the refineries or ports of entry. And prices vary among states only because of the different rates of sales tax levied by them.
In contrast, private firms like Reliance, Essar Oil and MRPL which offer fuel near coastal areas at prices below that of government-run Indian Oil, Bharat Petroleum, Hindustan Petroleum and IBP.
According to this new formula, called import parity pricing (IPP):
• Price of petrol will be up 19 paise per litre in Bangalore, Rs 1.80 per litre in Lucknow.
• Hike in diesel price will be between Rs 0.18 per litre in Bangalore to Rs 1.60 per litre in Lucknow.
• Price of petrol in coastal Trivandrum, however, will be down 12 paise per litre. And in Mumbai, it will fall by 40 paise.
• The dip in diesel price will be 20 paise and 40 paise respectively at these coastal locations. The threat from private firms came after import of transport fuels was decanalised on April 1 under the new Exim policy. Firms, which have permission to market transport fuels, can now import these for sale in the domestic market.
For example, in a recent tender floated by Bangalore Municipal Transport Corporation, Essar quoted a discount of Rs 834 per kilolitre to the landed cost offered by Indian Oil. In the same tender, Mangalore Refinery & Petrochemicals Limited (MRPL) quoted a discount of Rs 700 per kilolitre.
Reliance sells diesel from its Jamnagar refinery at Rs 400 per kilolitre less than PSU prices, according to the proposal.
