Diesel Prices in Uttar Pradesh
How are diesel rates in Uttar Pradesh moving currently? Are they showing an increasing trend or a decreasing trend? To make a thorough analysis of diesel prices in the state, let’s consider the four major cities, which are Lucknow, Kanpur, Ghaziabad, and Agra.
Lucknow is the capital city of Uttar Pradesh. Between 7 October and 16 October, the average rate of diesel in the city was Rs.58.30. In September 2017, the highest and lowest rates were Rs.59.95 and Rs.58.43 respectively. On the opening day of the month, the rate was Rs.58.43. On the closing day of the month, it increased to Rs.59.91. In August 2017, the highest rate was Rs.58.36 and the lowest rate was Rs.56.46. Similarly, in July 2017, the lowest and highest rates were Rs.55.03 and Rs.56.39 respectively.
Kanpur is the second largest city, which is also the main center of industrial and commercial activities. In the city, between 09 October and 16 October 2017, the cost of diesel has reduced to Rs.57.89 from Rs.58.05. It has decreased to Rs.58.36 from Rs.59.52 between 4 September 2017 and 25 September 2017. Between 21 August 2017 and 28 August 2017, the price has increased to Rs.57.48 from Rs.57.46.
Ghaziabad is another major city in the state. In the city, the average price of diesel between 7 October 2017 and 16 October 2017 was Rs.58.20. In September 2017, the lowest and highest rates were Rs.58.34 and Rs.59.87 respectively. In August 2017, the highest and lowest rates were Rs.58.28 and Rs.56.38 respectively. In July 2017, the price has increased to Rs.56.32 from Rs.54.95 on the closing day of the month.
Agra is a famous tourist destination. In the city, between 21 August and 28 August 2017, the cost of diesel increased to Rs.57.40 from Rs.57.38. It further increased to Rs.59.36 between 04 September and 11 September 2017. Between 19 September and 25 September 2017, it reduced to Rs.59.46 from Rs.59.57. This was the overall trend in diesel prices in Uttar Pradesh over the last four months.
Daily Revision of Diesel Prices in Uttar Pradesh
The daily revision is the new system of fuel pricing that has been implemented in India on 16 June 2017. According to the new system, all diesel bunks across the state will update diesel prices on a daily basis. Since all state-run oil marketing companies have adopted the daily revision, diesel rates have seen a steady and constant growth. All automated diesel bunks will automatically revise diesel prices every day. All non-automated diesel bunks will manually revise.
Features of the daily revision
- Prices will be revised on a daily basis at 06:00 a.m.
- Diesel consumers will be aligned to market dynamics.
- The system brings transparency in fuel pricing.
- Bunk owners will be able to practice the best inventory management principles.
- Neither the central government nor the state government will interfere in fuel pricing.
Computation of Diesel Prices in Uttar Pradesh
The actual cost of diesel per litre is computed using the following equation:
Retail price = Cost of crude oil + Refinery transfer price + Profit margin of oil marketing companies + Commission charged by dealers + Excise duty + State levies (VAT)+ pollution cess
Crude oil is imported by Indian oil entities. The cost that is incurred by Indian oil companies in order to buy crude oil is called the cost of crude oil. Ocean freight is also included in the cost of crude oil.
Refinery transfer price is the cost, which is incurred by oil marketing corporations to convert raw oil into diesel. It is charged by refineries.
Oil marketing companies then add a certain percentage of profit margin on the total of the cost of crude oil and refinery transfer price.
The refined diesel will then be shifted from refinery stations to retail diesel stations. Diesel bunk owners charge a certain percentage of commission for supplying diesel to end consumers.
Excise duty is the tax imposed by the central government on diesel. It will remain unchanged throughout the country.
Diesel is also taxed by state governments, but the percentage of tax differs from one state to another. The percentage of tax imposed on diesel in Maharashtra is comparatively high among all Indian states.
Factors Affecting Diesel Prices in Uttar Pradesh
The Cost of Diesel will increase if:
- The cost of crude oil goes up in overseas markets
- The currency of the United States of America (USA) gains against the currency of India
- The central government decreases the excise duty
- The state government decreases VAT
The Cost of Diesel will decrease if:
- The cost of crude oil decreases in overseas markets
- The currency of the United States of America (USA) falls against the currency of India
- The central government increases the excise duty
- The state government increases VAT
- Factors affecting the cost of crude oil
The Cost of Crude Oil will increase if:
- The demand for crude oil increases
- Oil extraction activities are interrupted by unfavorable weather conditions
- The INR weakens against the USD
The Cost of Crude Oil will decrease if
- The demand for crude oil is stable
- Oil extraction activities remain unaffected by weather conditions
- The INR gains against the USD
Impact of GST on Diesel Prices in Uttar Pradesh
- All petroleum products are not covered under the GST regime.
- The entire oil and natural gas industry has been kept outside the purview of GST.
- All industry participants continue to pay taxes as per the earlier system.
If GST is Imposed on Diesel:
- All industry participants have to follow the current and the GST framework.
- The compliance cost will be increased by 100%.
- The current price of diesel in Uttar Pradesh will fall by 20-30%.
- Diesel consumers will be benefited.
- The revenue source for the central and state governments is adversely impacted.
|Also Check: Diesel Price in Lucknow|
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