Petrol Price in Kakinada
Kakinada, a notable town in Andhra Pradesh, has a better network of petrol retail stations. 98% of fuel stations are run by publicly-owned oil marketing brands such as HPCL, BPCL and OIL. The prices offered by these three companies will almost the same. A minute price variation may be observed within the city. This could be due to dealer commission. During the first week of March 2018, on an average, the petrol rate in Kakinada was Rs.78.50 per litre. Excise duty, a major component of petrol prices, has been revised in the Union Budget 2018-2019 to Rs.19.48 a litre, including road cess. Value-added Tax (VAT), a state-level tax, will change from state to state. It was revised at 38.93% as of 4 September 2017.
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Analysis of Petrol Price in Kakinada
Petrol is priced differently by oil marketing enterprises regularly. At 06:00 a.m., a new price is offered to petrol buyers in Kakinada. Price changes mainly because of two reasons: 1) variations in the exchange rate and 2) crude oil price. Over the last 5-6 months, fuel rates have witnessed a growing trend owing to dynamic fuel pricing. In January 2018, the opening price was Rs.76.12 and the closing price was Rs.79.06 a litre. The highest price was at Rs.79.06 a litre on 30 January and the lowest price was at Rs.76.12 a litre on 01 January.
February 2018 was a crucial month for fuel consumers who had anticipated that petrol rates in Kakinada will be lowered. On 1 February 2018, Finance Minister presented the Union Budget 2018-2019 to the country. In the budget, it was proposed to dampen excise duty by Rs.2 a litre and extra taxes by Rs.6 a litre. To offset these changes, a road cess of Rs.8 a litre was proposed in the budget. Eventually, petrol prices in Kakinada were retained unaffected. During the month, the lowest price was at Rs.77.61 a litre on 28 February and the highest price was at Rs.79.53 a litre. The opening and the closing prices were Rs.79.53 and Rs.77.61 respectively.
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Why have Petrol Prices Increased?
The petrol rate in Kakinada has increased by 10% over the last one year since crude oil prices have gone up in overseas markets. They have now reached to $65 a barrel. One barrel is equal to 159 litres. Fuel suppliers have increased their commission to Rs.3.59 a litre. The central tax was cut twice between October 2017 and February 2018. Except Maharashtra, Uttar Pradesh and Goa, no other Indian states decreased VAT on petrol, including Andhra Pradesh. These are a few reasons that made petrol prices to jump their 4-year highs in the city of Kakinada.
Dynamic Fuel Pricing vs Fuel Prices in Kakinada
Dynamic fuel pricing is a fuel revision methodology India has adopted last year. Prior to that, it was tested in four Indian cities. It gives numerous benefits to fuel users, oil marketing businesses, fuel dealers and governing bodies. India has introduced to assure that fuel pricing is free from political influences. It is not only India, even Japan, the USA, Australia and Russia will follow this methodology. June 2017 onwards, dynamic fuel pricing has been in place in Kakinada. According to which, Bharat Petroleum, Indian Oil and Hindustan Petroleum have been offering new fuel prices to end customers in the city. Fuel prices in Kakinada will change daily in line with the exchange rate of the INR against the USD and overseas crude oil rates. If the exchange rate falls today, it will be reflected quickly in tomorrow’s price.
Features of Dynamic Fuel Pricing
Each entity should manage working capital efficiently. A business entity can be highly liquid if it can manage its working capital effectively. The net difference between highly liquid assets and current liabilities is called working capital. One of the best features of dynamic fuel pricing is that it helps OMCs to effectively monitor their capital. This way OMCs can ensure liquidity throughout the year. Cash outflows and inflows will not be disturbed. The expenses, which are spent to run day-to-day business activities, can also be reduced. Both fuel users and the Indian retail industry will be aligned to global market dynamics.
Trace Today’s Petrol Price in Kakinada
Which methods are you presently following to trace today’s petrol price in Kakinada? Is it offline or online? Of course, fuel consumers can trace the latest petrol rate in Kakinada through mobile applications and SMS requests. There are three mobile applications presently in use. All have different features. Using mobile applications, fuel customers not only obtain the current petrol price in Kakinada but also get offers related to general insurance. Most commonly used mobile applications include SmartDrive, My HPCL and Fuet@IOC. Smartphone users can download any of these mobile applications for free.
Breakup of Petrol Price in Kakinada
Firstly, we need to take into account crude oil rates, which are quoted in foreign markets. The crude oil per barrel as of March 2018 was $65. The value of the USD against the INR was Rs.65. A litre of crude oil costs Rs.26.57, which is 65X65/159.
Secondly, we have to consider OMC costs. The Refinery Transfer Price (RTP), the overheads spent to run day-to-day operations and import levies are estimated to be Rs.4.75 a litre. On the other hand, freight expenses, transportations overheads and the profit margin of oil marketing companies are estimated to be Rs.3.31 a litre.
Thirdly, the central tax is taken into consideration. As of November 2014, excise duty on petrol was Rs.9.20 a litre and accelerated to Rs.21.48 a litre in August 2017. It was further reduced to Rs.19.48 a litre in February 2018.
Fourthly, the commission charged by dealers is added. It has recently been raised to Rs.3.51 per litre. The dealer’s commission slightly varies from city to city.
Finally, all the aforesaid cost elements are added to offer the Retail Selling Price (RSP) of petrol to petrol users in Kakinada.
Factors Affecting Petrol Price in Kakinada
Petrol prices in Kakinada are impacted by several factors. The common factors include the exchange rate, which is quoted by the RBI, crude oil rates and the central and state governments’ practices related to taxes. If the state government of Andhra Pradesh reduces the local tax on petrol, oil marketing enterprises will reduce the RSP of petrol and vice versa. If the Central Government reduces the central tax, oil marketing enterprises have no other alternatives. They will reduce the RSP to avoid losses. Similarly, the petrol rate will fall domestically if crude oil rates increase overseas and vice versa.
GST vs Petrol Price in Kakinada
The current petrol price in Kakinada is not impacted by GST, a new system for imposing taxes on services and commodities. Petrol is a major commodity and earns revenues to the central and states. The implementation of GST will bring down the revenue. Therefore, it is not covered under the GST purview presently. Imposing GST on petrol is a good idea according to specialists, but the GST Council has to take the final call by considering the views of the Indian Prime Minister.
Also Check Petrol Price in NearBy Cities of Kakinada
*Disclaimer: BankBazaar makes no guarantee or warranty on the accuracy of the data provided on this page, the prevailing prices are susceptible to change and provided on an as-is basis. We accept no liability for any loss arising from the use of the data contained on this website.