Lok Sabha Question No. 225 (STARRED), answered on 2016-03-14
Subject: Oil Prices in International Market
Ministry: PETROLEUM AND NATURAL GAS
Asked by: MD. BADARIDDOZA KHAN

## LOK SABHA

## STARRED QUESTION NO. 225 TO BE ANSWERED ON 14 TH  MARCH, 2016

## OIL PRICES IN INTERNATIONAL MARKET

## *225.  SHRI MD. BADARUDDOZA KHAN:

## isVªksfy;e vkSj izkÑfrd xSl ea=h

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

- (a)  whether  it  is  a  fact  that  there  is  huge  fall  in  the  crude  oil  prices  in  international markets in last few months and if so, the details thereof;
- (b) whether the oil marketing companies have windfall profits, as a result thereof; and
- (c)  whether  the  Government  is  contemplating  to  reduce  prices  of  petrol  and  diesel commensurately and if so,  the details thereof and if not, the reasons therefor?

## ANSWER

## isVªksfy;e vkSj izkÑfrd xSl ea=h ( Lora= izHkkj ) ¼Jh /keZsUnz iz/kku½

MINISTER OF STATE (I/C) IN THE MINISTRY OF PETROLEUM AND NATURAL GAS \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(SHRI DHARMENDRA PRADHAN)   \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

- (a) to (c):  A statement is laid on the Table of the House.

## Statement referred to in reply to parts (a) to (c) of the Lok Sabha Starred Question No. 225 asked by Shri Md. Badaruddoza Khan to be answered on  14 th March, 2016 regarding 'Oil Prices in International Market'.

- (a): The monthly average price of Indian basket of crude oil since April, 2015 is given below:

## ($/bbl)

*up to 07.03.2016

|           | 2015-16   |
|-----------|-----------|
| April     | 59.07     |
| May       | 63.82     |
| June      | 61.75     |
| July      | 56.30     |
| August    | 47.33     |
| September | 46.10     |
| October   | 46.68     |
| November  | 42.50     |
| December  | 35.68     |
| January   | 28.08     |
| February  | 30.53     |
| March     | 34.09*    |

- (b): The Public Sector Oil Marketing Companies (OMCs) purchase crude oil based on the price in the international markets. The price of finished products in India is linked to their price in the international markets. The spread (crack margin) between the price of crude oil and petroleum products is linked to the gross profits of refineries.  The overall profitability position  of  oil  PSUs  depends  upon  various  other  general  and  specific  factors  including inventory losses.

The average price of Indian Basket of crude oil and the profit reported by the OMCs during 2013-14, 2014-15 and 2015-16 (April-December), is given below:

| Companies                                | 2013-14        | 2014-15        | 2015-16 (April-December)   |
|------------------------------------------|----------------|----------------|----------------------------|
| Indian Basket of Crude oil (US$/barrel)  | 105.52         | 84.16          | 50.91                      |
| Profit of Downstream oil companies/ OMCs | (Rs. in crore) | (Rs. in crore) | (Rs. in crore)             |
| IOC                                      | 7019           | 5273           | 9163                       |
| HPC                                      | 1734           | 2733           | 2310                       |
| BPC                                      | 4061           | 5085           | 4883                       |

During April to December, 2015, OMCs have reported inventory loss of Rs.11712 crore.

(c): The  prices  of  Petrol  and  Diesel  have  been  made  market  determined  by  the Government effective 26 th June, 2010 and 19 th October, 2014 respectively.   Since then, the Public  Sector  Oil  Marketing  Companies  (OMCs)  take  appropriate  decision  on  pricing  of Petrol and Diesel in line with their international prices and other market conditions. Further, Retail Selling Price (RSP) of Petrol and Diesel in the country are based on their respective international prices and OMCs are at present applying Trade Parity Pricing methodology to compute the RSP.  Other cost elements in the RSP of Petrol & Diesel viz Excise Duty, BS IV premium, marketing cost and margins etc. are specific costs which do not increase/decrease with the volatility in international prices of Petrol and Diesel. The element of excise duty which is specific in nature has increased since November, 2014. Most of the State Governments also have increased VAT on Petrol and Diesel. After taking into account these factors, OMCs have passed on major portion of the decrease in price to the consumers of Petrol and Diesel.

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