Diesel Price in Tuticorin
Diesel price in Tuticorin, an industrial city in South Indian state of Tamil Nadu, is composed of various elements. Also called Thoothukudi, the city of Tuticorin is becoming an emerging industrial and energy centre of south India. With diesel being one of major fuels to run industries, the consumption of fuel in the port city is likely to be high. Further, with the increasing number of diesel-run private and personal vehicles, the city records highest diesel consumption in the state.
From the common man’s perspective there are many apprehensions about how diesel is priced in Tuticorin, why is diesel charged high in India compared to other countries, what can be done to reduce diesel price and lot more. Here is an attempt to answer all such questions. Hope it helps to clear your confusion about diesel price in Tuticorin.
Components Involved in Diesel Pricing in Tuticorin
Have you ever observed that diesel never comes with an MRP or manufacturing retail price? Ever wondered why? Well, diesel and other fuels do not have an MRP because they are not manufactured goods. These fuels are available beneath earth’s crust in crude form. The crude oil needs to be explored, drilled, and refined to extract diesel, petrol, kerosene and other petroleum products.
- International components
Though India has some natural crude oil reserves, compared to the country’s demand, they are not sufficient. Hence, the country imports over 70% of its oil requirements from OPEC nations such as Saudi Arabia, Iran, Kuwait, United Arab Emirates, and others. The oil companies in those countries, conduct exploration and drilling activities to pull out the crude oil, either from land or from oceans. They, then sell the crude oil in the international market.
Crude oil is typically sold in barrels and is traded in US dollars. The rate at which Indian oil companies purchase crude oil thus becomes the base rate of diesel or petrol. Therefore, international crude oil price and US dollar to Indian rupee exchange rate are two major components of diesel pricing in Tuticorin or in any other Indian city.
The price of Indian crude basket will be published by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas. In March 2018, the price of Indian basket was $63.80 per barrel (bbl). Each barrel is equivalent to 159 litres of oil, considering which price per litre of diesel will be calculated. It’s then converted into Indian rupees considering the currency exchange rate on a given day.
- Domestic components
Besides the two international factors – crude oil price and currency exchange rate, there are domestic components that make up diesel price in Tuticorin. The major components include the state and central government taxes on fuel, while the minor components include profit margins of Indian oil companies and petrol dealers commission.
The central government charges excise duty on every litre of diesel sold in the country. The rate of excise duty remains the same across all Indian states. Currently, the centre levies an excise duty of Rs.15.33 per litre of diesel.
Besides the central taxes, each state government collects value added tax (VAT) on every litre of diesel sold in the state. The tax applies to all the cities and towns within the state and remains the same across the state. However, the VAT charged by one state government varies from another as the authority to decide the tax rate is solely at the respective state’s discretion. Thoothukudi being a city in Tamil Nadu state, the government currently charges 24% VAT on every litre of diesel sold in the state.
The state and central government taxes may not affect the diesel rate on a daily basis. However, whenever there is a revision in the rates, diesel prices in Tuticorin will be adjusted accordingly.
|Also Know: Diesel Price in Chennai|
The other two components of diesel pricing are the oil company’s profit margins and dealers commission. As discussed earlier, Indian oil companies purchase crude oil from other countries. They then conduct crude oil refining activities to extract diesel from its crude form. Hence, they will add refining costs, transportation costs and other costs involved in transporting and refining the crude and their profit margin to the cost price of the crude oil. Thus, the costs added by Indian oil companies is one of the components involved in diesel pricing in India.
Finally, the dealers commission. Dealers are the petrol station owners who purchase the refined crude or diesel from the oil companies. After purchasing diesel, they will add their own costs such as transportation costs, fuel pump maintenance costs, etc., as commission to the cost price of diesel. Hence dealer’s commission is one of the components of diesel pricing in Tuticorin.
Daily Revision of Diesel Price in Tuticorin
Visit any petrol station in Tuticorin, you will find a different diesel price every day. Many of you might be aware of this, while a few are still not sure why it is so. Well, fuel prices in India are being revised on a daily basis ever since dynamic fuel pricing has been introduced.
Dynamic fuel pricing is a type of pricing mechanism which revises fuel prices every day based on international crude oil price and currency exchange rate. The pricing model is popular in most of the western countries and is also found as an effective pricing mechanism. With the new pricing model, fuel prices in India will be aligned to international fuel prices on a daily basis, hence, any minute change in crude oil price will be delivered to the end user. Further, it promotes transparency in fuel pricing.
Diesel prices in Tuticorin will be updated every day by 6 a.m. Today’s diesel price will be computed using previous day’s crude oil price and currency exchange rate. While the automated fuel stations will be updated centrally, the non-automated stations will revise the price manually.
Breakdown of Diesel Price in Tuticorin, Tamil Nadu
Using the factors listed above, let’s see how the diesel rate in Tuticorin on 25th April 2018 is calculated.
|1||International crude oil price along with ocean freight charges||$84.68 per barrel = Rs.34.83/Litre (considering $1=65.41 and 1 barrel oil = 159 litres)|
|2||Oil company’s margin, transportation, refining and freight cost||Rs.3.54/Ltr|
|5||Value added tax (VAT)||Rs.13.34/Ltr|
|Total||Retail selling price of diesel at Tuticorin||Rs.69.56Ltr|
Also Check Diesel Price in NearBy Cities of Tuticorin
|Diesel Price in Coimbatore||Diesel Price in Trichy||Diesel Price in Vellore||Diesel Price in Madurai|
|Diesel Price in Salem||Diesel Price in Erode||Diesel Price in Chennai||Diesel Price in Tirunelveli|
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