Petrol Prices in Lucknow
Being the capital city of Uttar Pradesh, Lucknow is a center of finance, technology and commerce. It is the biggest city by population and area. The city has a vast number of petrol users. In Lucknow, there are approximately 100 petrol stations owned by Bharat Petroleum, Hindustan Petroleum and Indian Oil. A majority of petrol stations are owned by Bharat Petroleum, which is a premier oil marketing brand in India. The consumption of petrol is increasing with a growing number of petrol users in the city. Petrol prices are no different.
How are Petrol Prices in Lucknow Revised?
In Lucknow, all 100 petrol bunks will revise petrol prices under the dynamic fuel pricing method, which came into effect on 16 June 2017. Dynamic fuel pricing is a streamlined fuel pricing method in which fuel rates are updated every day at 06:00 a.m. in sync with the exchange rate and the cost of crude oil. Other countries that follow the daily revision system include the United States of America, Russia and Australia. India joins these countries by introducing the system.
The daily revision will enhance confidence in the sustainability of deregulation since regular variations can be easily transmitted to consumers. Under the new system, the revision is free from government interventions. Dynamic fuel pricing also gives oil marketing companies (OMCs) better control and flexibility. Dealers will be able to adopt the best inventory management principles. In the fuel retailing sector, the daily revision is a major reform.
Why Dynamic Fuel Pricing?
Dynamic fuel pricing has been introduced in India to eradicate political influence on fuel pricing, ensure 100% transparency in fuel pricing, align petrol customers to market dynamics, instantly transfer ups and downs in global crude oil prices to end users, reduce the impact on the working capital of dealers and oil marketing entities, and attract the involvement of private participants in the fuel retailing segment.
Petrol Rates in Lucknow Before Dynamic Fuel Pricing
In April 2017, petrol rates in the city were steady throughout the month. The fuel was sold at a price of Rs.69.35 per litre. In May 2017, the price revision was made twice. On the first day of May 2017, the price was Rs.70.76. On the last day of the month, it reduced to Rs.68.61. Prices were down by 3.13% in May 2017. On the opening day of June 2017, petrol was priced at Rs.69.86. On the closing day of the month, the petrol price in the city diminished to Rs.66.74 due to the effect of dynamic fuel pricing.
Petrol prices in Lucknow after dynamic fuel pricing
After the first two weeks of the daily revision, the petrol price in Lucknow started increasing marginally. On the last day of July 2017, the price increased to Rs.68.52 from Rs.66.74 as on the last day of June 2017. The lowest price in July 2017 was Rs.66.51 whereas the highest rate was Rs.68.52. Petrol prices were up by 4.04% and 2.90% in August 2017 and July 2017 respectively. The highest rate in August 2017 was Rs.71.53. On the last day of September 2017, the price further increased to Rs.72.71.
Petrol Costs in Lucknow and other Cities
Petrol was priced at Rs.70.86 in October 2017 in Lucknow. In New Delhi, the capital city of India, the fuel was priced at Rs.68.70. In Kolkata, the capital city of West Bengal, the average petrol rate per litre was Rs.71.50 in the same month. In Mumbai, the state VAT imposed on petrol is high. Due to which, the fuel was sold at an average price of Rs.75.75 per litre. In Chennai, the capital city of Tamil Nadu, the petrol price was lower than Rs.71.50 per litre in the same month.
How are Petrol Prices in Lucknow Assessed?
Crude oil is the primary raw material of petrol. It is bought from overseas oil marketing entities. Crude oil is traded in the base currency, which the currency of the United States of America (USA). The price remitted by Indian oil marketing corporations to purchase unrefined oil is called the cost of crude oil. Indian oil marketing companies also pay the freight charges incurred to shift crude oil from overseas ports to Indian ports. Another cost element is refinery transfer price, which is the price charged by refineries to convert crude oil into petrol.
The profit margin of oil marketing companies (OMCs) is added to the costs incurred by OMCs. The biggest cost element in the price structure of petrol is the tax imposed on petrol. In Uttar Pradesh, petrol is taxed at 32.90%. The central excise duty levied on petrol in India was Rs.19.48 per litre as on 4 October 2017. Other cost elements include the commission charged dealers and pollution cess. All these cost elements are added to arrive at the retail selling price of petrol in Lucknow.
Determinants of Petrol Prices in Lucknow
The central government reduced the central excise duty on petrol by Rs.2 per litre on 3 October 2017. After the revision, the petrol rate in Lucknow was low by Rs.2 per litre. This is how the cost of petrol is impacted by variations in the central excise duty. Unlike Gujarat and Maharashtra, the government of Uttar Pradesh has not lowered the state VAT imposed on petrol in October 2017. Consequently, variations in the state VAT affect the final petrol price. The exchange rate and crude oil prices also affect petrol rates.
What is the Impact of GST on Petrol Price in Lucknow?
Indian customers pay GST on all types of goods and services. GST came into effect on 1 July 2017. All Indian taxpayers are brought under a common platform called GST. Petrol and diesel have not been included under the regime of GST. Therefore, the current GST rate does not make any difference to the cost price of petrol in the state. It is projected that the cost price of petrol will be reduced by at least 30% if GST is imposed on petrol.
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