Lok Sabha Question No. 364 (UNSTARRED), answered on 2017-12-18
Subject: Impact of Taxes on Price of Petroleum Products
Ministry: PETROLEUM AND NATURAL GAS
Asked by: PREM SINGH CHANDUMAJRA, KALIKESH NARAYAN SINGH DEO

## LOK SABHA

## UNSTARRED QUESTION NO.364 TO BE ANSWERED ON 18 TH  DECEMBER, 2017

## IMPACT OF TAXES ON PRICE OF PETROLEUM PRODUCTS

## †364.   PROF. PREM SINGH CHANDUMAJRA: SHRI KALIKESH N. SINGH DEO:

## पेट्रोल ियम और प्राक ृ तिक गैस मंत्री

## Will the Minister of PETROLEUM AND NATURAL GAS be pleased to state:

(a) whether the retail selling price of petrol and diesel increased by almost 100 per cent in comparison  to  its  actual  production  cost  due  to  imposition  of  higher  taxes  and  if  so,  the details  thereof  along  with  the  steps  taken  by  the  Government  to  reduce  the  prices  of petroleum products;

(b) whether the Government proposes to bring petroleum products under Goods and Services Tax and if so, the details thereof and if not, the reasons therefor;

(c)  whether  petrol  and  diesel  have  been/are  being  sold  to  consumers  in  proportion  to international crude oil prices during the last three years and the current year and if so, the details thereof;

(d) the revenue and profit earned by the public sector oil companies from the sale of petrol and diesel by taking advantage of low international crude oil prices during the said period, company-wise;

(e)  whether  the  Government  monitors  the  prices  of  various  petroleum  products  including petrol and diesel fixed by the private companies to ensure that the prices are in conformity with the variation in the crude oil prices in the international markets; and

(f) if so, the details thereof and the steps taken against private companies for not passing the benefit  of  low  crude  oil  prices  to  the  consumers  and  also  to  safeguard  the  interest  of  the consumers?

## ANSWER पेट्रोल ियम और प्राक ृ तिक गैस मंत्री (श्री धमेन्द्र प्रधान)

## MINISTER OF PETROLEUM AND NATURAL GAS (SHRI DHARMENDRA PRADHAN)

(a) to (c): The  prices  of  Petrol  and  Diesel  have  been  made  market  determined  by  the Government effective  from  26 th June,  2010  and  19 th October,  2014  respectively  and  since then their prices are being decided by the Public Sector Oil Marketing Companies (OMCs) in line  with  the  changes  in  the  international  market  prices.  The  Public  Sector  OMCs increase and decrease the prices on the basis of the price of respective products in the international market and not to that of crude oil.

Refining  of  crude  oil  is  a  process  industry  where  crude  oil  is  processed  through  several processing units.  Each of these units produces intermediate products streams which results in difficulty in apportioning the total cost of individual refined products.  Therefore, individual product-wise costs are not identified separately.

With an aim to reduce the prices of Petrol and Diesel and give relief to the consumers, the Central Government reduced the Central Excise duty on Petrol and Diesel by Rs.2 per litre effective  from  4 th October,  2017.    The  Central  Government  also  requested  the  State Governments to reduce VAT imposed by them on Petrol and Diesel so as to give more relief to  the  consumers.  Accordingly,  three  State  Governments  and  one  Union  Territory  have reduced the VAT on Petrol and Diesel.

The  Goods  and  Services  Tax  (GST)  has  been  implemented  w.e.f.  1.7.2017.    Five petroleum sector items viz., Crude Oil, Natural Gas, Petrol, Diesel and Aviation Turbine Fuel (ATF),  are  presently  outside  the  scope  of  levy  of  GST,  till  such  time  as  they  are  notified based on the recommendation of GST Council.

- (d):   The total revenue, Profit After Tax of the OMCs from all activities including sale of Petrol, Diesel and LPG during the last three years and current year is given as under:-

(Rs. crore)

| Companies        | 2014-15   | 2015-16   | 2016-17   | H1, 2017-18   |
|------------------|-----------|-----------|-----------|---------------|
| Revenue          |           |           |           |               |
| IOC              | 4,36,390  | 3,49,321  | 4,38,692  | 2,33,506      |
| HPC              | 2,06,380  | 1,79,281  | 2,13,489  | 1,14,044      |
| BPC              | 2,37,905  | 1,89,098  | 2,41,859  | 1,30,673      |
| Profit After Tax |           |           |           |               |
| IOC              | 5,273     | 10,399    | 19,106    | 8,245         |
| HPC              | 2,733     | 3,863     | 6,209     | 2,659         |
| BPC              | 5,085     | 7,432     | 8,039     | 3,102         |

Source: PPAC

(e)  &  (f):      Since  the  pricing  of  Petrol  and  Diesel  is  deregulated,  the  retail  marketing companies, including the private oil companies, themselves decide the prices of Petrol and Diesel being sold from the Retail outlets run by them.

In order to protect the consumers from the fluctuations in the prices in the international market, the Government continues to modulate the RSP of Subsidized domestic LPG and PDS Kerosene.