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Petrol price in India is revised every day after adapting to dynamic pricing mechanism. Get today’s latest updated petrol price in Petrol Price In Gurgaon
14 August 2020
Current Petrol Per Liter
₹ 78.62 /L
₹ 0.00 /L
Gurgaon is referred to as the Satellite city of Delhi, it is located in the
northwestern part of Haryana. It is considered part of the National capital
region, and it is also the hub for BPO industries. It was recently
rechristened as Gurugram. The city has become a hub for MNCs and has a slew
of malls. The immigrant population has been on a consistent rise since the
advent of outsourcing business in India. This has resulted in better
standards of living, higher disposable income and varied job opportunities.
The improved economic status has translated in to increased number of
aspirational buys including high-end bikes, cars and motor vehicles. While
this has led to increased carbon footprint and pollution, it has also
increased the demand for petrol and diesel. Thus, the petrol prices have
been on the rise and has been a cause of concern for many months now.
The dynamic fuel pricing mechanism was introduced by the Government in June
2017. This mechanism replaces the earlier pricing mechanism which allowed
the OMCs (oil marketing companies) to revise the petrol and diesel prices
on a fortnightly basis. The OMCs incurred substantial losses due to their
inability to pass on the cost squeeze to the end user on a proactive basis.
The Government had to intervene from time – to – time to extend subsidy and
relief to OMCs to ensure that they operated within acceptable margins. The
dynamic fuel pricing mechanism allows the OMCs to revise their petrol and
diesel prices on a daily basis to reflect the International cost pressures.
This mechanism promotes better transparency for fuel pricing. This method
is followed by developed nations and promotes free trade economy. Gurgaon,
along with the rest of India adapted this mechanism as of June, 2017.
Petrol and diesel prices are revised by OMCs every day at 6 A.M,
the same is available for public consumption immediately
Tech-enabled petrol pumps automatically revise the petrol prices
and use the new price for calculating the petrol and diesel
If the petrol pump is not automated, then there is a need for
This system reduces the working capital reserve for conducting
day-to-day activities and improves inventory management system
The macro economic factors which cause the margin squeeze for OMCs
are immediately passed on to the end user, thereby cutting the
stress on the financials of the companies.
Petrol prices are ascertained after aggregating various costs and margins
applicable. Some of the costs pertain to international factors and some of
them are local in nature. All the factors are computed and attributed to
the refined product and the pricing per litre is arrived at accordingly.
Two of the major influencers for petrol and diesel prices are Crude oil
price which is the raw material for the end product and currency exchange
rates. The local factors do have a subtle influence on the petrol prices,
among the local factors, the taxes levied have a larger role to play.
International factors –
Crude oil prices– Crude oil is the basic raw material required for manufacturing the end
product petrol and diesel. The refining process for these two end products
is entirely different. Petrol undergoes a far more complex refining process
as compared to that of diesel. Every barrel contains 159 litres or 42 US
gallons of crude oil, as of today the per barrel cost is $79.61 (22
October, 2018). The OPEC nations which are the primary exporters of crude
oil announced production cuts at the start of the year. Thus, the crude
prices have been on the rise over the past 10 months. This has greatly
influenced the petrol and diesel pricing.
Currency exchange rates– Crude oil is an imported commodity; hence, the settlement has to be made
in US Dollars. The dollar has been strengthening against the rupee which
means that the OMCs have to shell out more funds as procurement cost. The
increase in outflow has resulted in tightening of gross profit margins for
the OMCs. However, with the dynamic fuel pricing mechanism the OMCs are now
able to pass on the cost squeeze immediately to the end user.
Local factors –
Operating and marketing costs– All the costs involved in transportation, refinement and distribution of
petrol may be considered as local factors. Depending on the demand – supply
dynamics, demographic spread and transport infrastructure, the costs could
vary across cities. Gurgaon is a well-connected city with availability of
labor at cheaper rates, hence, the influence of this factor is minimal.
Excise duty and VAT– The petrol price comprises of levies by Central and State Government.
Over 50% of the retail selling price comprises of excise duty which is
levied by Central Government. The excise duty is applied at Rs. 19.48 per
litre. On diesel, it was Rs.15.33 per litre. The local tax levied by
Haryana Government on petrol amounts to 26.25%. and on diesel amounts to
Dealers commission– The dealers charge a commission of 7% per litre of petrol, this could
vary across cities depending on logistics and demand – supply dynamics.
The petrol price in Gurgaon is determined as an aggregate of various cost
centers. The various cost centers which form a part of the petrol pricing
Free on-board –The purchase price of crude oil from overseas dealers by Indian oil
marketing companies (OMCs) is termed as free on-board price. In simple
terms it is the sum total of crude oil price and dealer commission
converted to local currency using the latest exchange rate applicable.
Customs duty– Customs duty is applicable on all items that are imported into India.
Crude is one of the largest import commodities in India. The Central
Government levies relevant % as customs duty on various commodities. The
current customs duty on crude oil is 15.5% with 10% being the basic customs
duty and 5% integrated goods and services tax. This customs duty is
applicable on crude oil.
Import parity price– IPP is the aggregate of import charges, duty and freight costs – this is
paid by the Indian OMCs at the Indian port.
Refinery transfer price –The refineries process the crude oil and create the desired end product,
namely petrol and diesel. The refineries transfer the end product to the
petrol pumps of the OMCs for distribution among end user. This price paid
by OMCs to refineries for transferring the petrol and diesel to respective
petrol pumps of OMCs is termed as refinery transfer price.
Inland transportation– The transportation cost of petrol and diesel to retail outlets is termed
as inland freights which is paid by the OMCs to the transport facility
hired for distribution among retail outlets.
Depot price –The retail outlet owners pay per litre price on the petrol or diesel
purchased from oil marketing companies. This is termed as depot price.
Often, the retail outlets may belong to the oil marketing companies, in
which case there would be a segment or departmental charge transferred and
would be treated as inter-department or inter-subsidiary transfer.
Import charges– There are more nuances to importing commodities from overseas, the
insurance charges, port dues and ocean losses due to pilferage etc., (if
any) is aggregated as import charges. The premium paid to the insurance
provider for obtaining a hedge against the commodity imported is termed as
insurance charges. Port charges refer to the charges levied on importing
company for using the port facility for temporary stocking of commodity.
The retail selling price of petrol and diesel in Gurgaon is the sum total
of all the mentioned cost centers. Apart from these costs, there are levies
by Central and State Government which are included to ascertain the price
per litre of petrol and diesel.
The petrol price per litre in Gurgaon is Rs. 80.09 as of 23 October, 2018,
the petrol prices have hovered around these levels over the past 15
sessions. Gurgaon witnessed petrol prices peak in September, 2018 with
petrol price per litre at Rs. 83.83. The Government briefly intervened to
provide relief to the end user, by cutting the price per litre of petrol by
Rs. 2. However, with the macro economic factors, looking weak, the experts
are of the view that the relief is likely to be short lived. The rest of
the year could remain stressful in terms of petrol and diesel prices.
How are petrol prices in Gurgaon calculated?
The retail selling price of petrol in Gurgaon is the aggregate of crude oil
cost, taxes (Excise duty and VAT), refinery transfer price and OMC
expenses. This amount is added along with the margins on the product. This
would become the petrol price applicable for the particular retail outlet.
Why is there price difference between per litre cost of
petrol and diesel in Gurgaon?
The state levies or VAT on diesel is 17.22% and petrol is 26.25%, this is
one of the primary reasons. Apart from this the refinement process for both
the end commodities is different. The process is more complex in the case
of Petrol, thereby the cost incurred is higher. This is yet another factor
which influences the price of petrol and diesel.
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