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Petrol Price In Mumbai

08 April 2020

Date

Petrol Prices

Change

  • 2020-04-09

    ₹ 76.29 /L

  • 2020-04-08

    ₹ 76.29 /L

  • 2020-04-07

    ₹ 76.29 /L

  • 2020-04-06

    ₹ 75.28 /L

  • 2020-04-05

    ₹ 75.28 /L

  • 2020-04-04

    ₹ 75.28 /L

  • 2020-04-03

    ₹ 75.28 /L

  • 2020-04-02

    ₹ 75.28 /L

  • 2020-04-01

    ₹ 75.28 /L

  • 2020-03-31

    ₹ 75.28 /L

  • 2020-03-30

    ₹ 75.28 /L

  • 2020-03-29

    ₹ 75.28 /L

  • 2020-03-28

    ₹ 75.28 /L

  • 2020-03-27

    ₹ 75.28 /L

  • 2020-03-26

    ₹ 75.28 /L

  • 2020-03-25

    ₹ 75.28 /L

  • 2020-03-24

    ₹ 75.28 /L

  • 2020-03-23

    ₹ 75.28 /L

  • 2020-03-22

    ₹ 75.28 /L

  • 2020-03-21

    ₹ 75.28 /L

  • 2020-03-20

    ₹ 75.28 /L

  • 2020-03-19

    ₹ 75.28 /L

  • 2020-03-18

    ₹ 75.28 /L

  • 2020-03-17

    ₹ 75.28 /L

  • 2020-03-16

    ₹ 75.28 /L

Petrol Prices in Mumbai

Mumbai is the capital city of Maharashtra and the Commercial capital of India. It is also one of the largest metro cities in the world. Mumbai generates more than a quarter of the state’s gross domestic product. Almost half of the Indian foreign trade transactions happen in this city.

The city area is 604 square kilometres. As per 2011 census, the population of Mumbai city was 1.84 crores. Mumbai is known as one of the top 10 commercial centres in the world. It is also home to major financial institutions like the RBI, National Stock Exchange of India and Bombay Stock Exchange. Film & Entertainment industry has a vast base in the city. The economy of Mumbai was once dominated by the cotton textile industry, however, now it is completely diversified. It includes petrochemicals, automobile manufacturing, metals, electronics and engineering.

Transport Infrastructure in Mumbai

The maximum city is one of the most populous cities in the world. The suburban railway network is the lifeline of the metro. During peak time, the local trains get overloaded. This is the most preferred mode of transport in the city due its efficiency, speed and cost.

In the past decade or so, the infrastructure has become more developed with the introduction of the Mumbai metro. The Metro Line -1 has become operational in 2018 and aims to ease the congestion on the local railway network. Apart from the railway network, the city has a robust taxi network and top cab brands like Uber and Ola are also present. However, the taxi services face a real challenge of road congestion and time taken to travel from one place to another. The government run buses also ply across all areas of the city and is a preferred mode of transportation due to cost.

Even though the city has many transportation modes, own vehicle, be it a two wheeler or four wheeler still remains the preferred option of moving around. The city has seen many expressways and flyovers including the famed sea-link road to ease the traffic woes. Despite these additional roads, the traffic issues continue to surge with the burgeoning population. In the year 2016-17, the total number of vehicles registered with transport department of Maharashtra was close to 31 lacs. The vehicle count is up by 56% just in 5 years.

The petrol price has been on a high for the past few months. Mumbai has been seeing one of the most expensive prices for a litre of petrol. The price of petrol has been consistently above Rs. 85 per litre in the past few weeks. Let us analyse the reasons behind the rising petrol price.

Why are petrol rates so high in Mumbai?

Mumbai has been the most expensive state capital as far as petrol prices are concerned. The city recorded a Rs. 90+ price for the first time in history a few weeks back. There are many reasons for this steep price hike.

The state of Maharashtra levies one of the highest VAT slabs in the country. In fact, there are two VAT slabs. Petrol pumps in Mumbai, Thane and Navi Mumbai have to shell out a VAT of 39.12% which is a percentage point less than the rest of the state.

Globally, there have been many trade wars and geo-political tensions have contributed to the price rise in international crude oil.

As a country, we import crude oil to process it further into many petroleum products. The supply of crude oil is in the hands of OPEC countries. (Organization of Petroleum Exporting Countries) the supply and production of crude oil has been on a tight leash leading to an increased demand globally and therefore, increase in crude oil price. This has a direct influence on the petrol price in our country.

Pricing Mechanism of Petrol in India

The Retail Selling Price of petrol (RSP) is determined by many components. There is an elaborate process to arrive at this price. All the Oil marketing companies in our country like the IOCl, BPCL and HPCL use the Trade Parity Pricing method to calculate RSP. The price is calculated on the assumption that 80% of the fuel is imported in India and 20% exported. That means, the import parity price is 80% and 20% constitutes the Export parity price.

Export Parity Price: The amount realized by the oil marketing companies on exporting petroleum products is called as the export parity price. This includes the FOB and ALB as well. (Advance license benefit) It is currently nil as the Government abolished the Customs Duty of Crude Oil in 2011.

Import Parity Price: It includes the FOB charges (Free on Board), Ocean Freight, Custom Duties, Insurance and Port dues. This total price is paid by the importers at the port.

There have been many critical views on this pricing method. It does seem that this method has been followed to protect the interests of the OMCs. This makes sense only when the fuel prices are controlled by the government and not affected by the international market prices. Experts are of the opinion that the pricing of fuel needs to be based on the cost borne by the refineries and their margins. Since most of the petroleum products are exported, the allocation of 20% towards EPP is not entirely correct.

Components of petrol prices in India

There are many components that add up to the petrol prices in India.

  • Customs Duty : It is the tax imposed by the Government of India and currently hovers around 7.5%

  • Import Parity Price: It is the combined price of petrol paid by all oil marketing companies at the port.

  • Free on-board price : When oil marketing companies purchase crude oil from international markets, it is called free on-board price

  • Refinery Transfer price : Price paid by oil marketing companies to transfer crude oil to refineries

  • Inland Freight : Transportation cost paid by oil marketing companies to transfer petrol from refineries to retail outlets

  • Depot Price : Owners of retail outlets need to pay a fee to buy petrol or diesel from oil marketing companies

  • Freight : Transportation cost for purchase of crude oil from overseas by oil marketing companies

  • Import charges: There are few charges that make up the Import charges. Insurance, port dues, ocean loss are some of them

  • Excise Duty: Duty imposed by the Central Government for importing crude oil

The above components make up the petrol price in Mumbai. Almost 40-45% of the petrol cost is made up of all taxes and dealer commissions.

Petrol price in Mumbai as compared to other cities

Mumbai offers the costliest petrol in the country as compared to other state capitals. It made history a few weeks back when the petrol price crossed Rs. 90 per litre. Delhi has the lowest price for fuel bordering the Rs. 80 mark. Patna and Bhopal also have high prices of petrol wherein the prices hover in the range of Rs. 87 to Rs. 89 per litre. The cheapest petrol is sold in Port Blair (Rs. 70-74), Panjim (Rs.75 – 78) and Agartala (Rs. 80-83).

How frequently are petrol prices in Mumbai computed?

In the last one year or so, our model of calculating petrol prices have been revised. The Dynamic Fuel pricing model has been introduced by the Government of India. Under this model, the petrol price is directly linked to the international price of oil. It is now revised on a daily basis in line with the international prices. The fortnightly revision has been done with. This system brings about transparency in the calculation of petrol price and reduces the influence of the government and political parties.

The updated petrol price is available at 6am every day. The calculation is done on the basis of the previous day’s international crude price. The revision in the price can be tracked through the following manner:

  1. App: The OMCs have brought out apps that help you track the prices through your phone. Fuel@IOC is the app developed by IOCL. This can be downloaded through the Google Play Store and Apple Store. SmartDrive is managed by BPCL and MYHPCL by HPCL.

  1. SMS: There is an option of sending a text message to dealer for quick updates.

(Retail Sale Price) RSP< SPACE >DEALER CODE to 9224992249 (For Indian Oil) For Bharat Petroleum, the number is 9223112222. For Hindustan Petroleum, you can send an SMS HPPRICEDEALERCODE to 9222201122.

  1. OMC website: The websites are also updated on a daily basis and you can view the prices of petrol in each city with the help of the RO locater.

Benefits of Dynamic Fuel Pricing

One of the most important benefits of the Dynamic Fuel pricing system is the speed at which the change in international prices is reflected on the petrol price to the end consumer. This happens within a day now instead of a fortnight earlier. The benefit of a reduced crude oil price can now be immediately passed onto the end consumer within a day instead of waiting for a 2 week period.

This model of pricing is at par with the methods followed in many of the advanced countries. The transparency at which the rates are determined with very little influence from the Government makes it very attractive.

The daily revision in the petrol price brings about parity in the domestic pricing of the fuel. Consumers enjoy the benefit of lower prices immediately and OMCs are immediately able to pass on the hike as well.

GST and Petrol Prices in Mumbai

There are many taxes, duties and VAT applicable on the fuel price today. It has not yet been included under the GST scheme. There has been a widespread push for including the petrol price under the GST. However, the Government is mulling over a partial inclusion only. This may lead a higher price than what it is today due to the 28% slab and the state added VAT. There has to be a conscious decision taken by both Central and State Government to make fuel more affordable to the common man.

Ways to save Petrol Cost

Cashback on Fuel Cards: One can easily save expenses on petrol by using the credit/debit cards that are co-branded with the Oil Marketing Companies through their cashback schemes. Surcharge waivers are also a regular feature with these cards. Some of these cards are ICICI Bank HPCL credit card, BPCL SBI Credit card and HDFC All Miles credit card.

Electric cars:Electric cars are a good alternative to the motor vehicles using fuels like petrol and diesel. Though this concept is relatively new in India, there is a widespread interest in using electric vehicles. As per experts, the maintenance cost is under one rupee per kilometre on an electric car compared with four to five rupees on a diesel or petrol vehicle.

Car Pooling:This is a very good option for office-goers and other daily commuters as it reduces your monthly expenses as well as decreases the congestion and pollution on the roads.

Cycle to work:Many companies have been promoting the idea of cycling to work by its employees. It helps in reaching your destination faster and is definitely easier to maintain than a vehicle.

Ridesharing:Leading cab services like Uber and Ola have introduced the option of ridesharing. You can share the ride with a fellow rider who is also going to the same area. This helps in sharing the expense as well as reduces the number of vehicles on the road.

FAQs

1.Why does Mumbai have a high rate of petrol price?

The VAT slab charged by the State Government of Maharashtra is quite high at 39.12%. There are two VAT slabs prevailing in the state now. This is one of the major reasons for a high petrol price in the city.

2.How frequently is the petrol price revised?

Under the new pricing model, the petrol price is revised on a daily basis and the updated rate is available at 6am.

3.Is petrol included under the GST scheme?

No, currently petrol is not included under GST.

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