Petrol Price in Tuticorin
Petrol price in Tuticorin, also known as Thoothukudi, an industrial city in South Indian state of Tamil Nadu is composed of various elements. With the city becoming an emerging energy and industrial hub of south India, the consumption of fuel is likely to be on an increasing trend.
With petrol being the major fuel to power both personal and private vehicles, the usage of petrol in the port city would be high compared to other surrounding cities or towns. Just like in any other city in Tamil Nadu, petrol price in Thoothukudi is composed of various factors, both domestic and international. Listed below are all such factors that contribute to petrol price in Thoothukudi and other important information one needs to know about petrol in Thoothukudi.
Factors affecting Petrol Rate in Tuticorin
Petrol price in Tuticorin is composed of various domestic and international factors. International factors that affect petrol price in the city on a daily basis include international crude oil prices and currency exchange rate. Domestic factors include central government taxes, state government taxes, profit margins of oil companies and dealer’s commission.
Domestic factors, unlike international factors, do not affect the petrol price in Tuticorin on a daily basis. However, whenever there is a revision in taxes, commissions and profit margins, petrol rate will get affected. Let’s us take a look at each factor that affects petrol price in the port city in detail.
- International Crude Oil Prices: India imports more than 70% of its crude oil requirements from other countries. Hence, the crude oil price in the international market plays a key role in petrol pricing in India. Further, with the introduction of dynamic fuel pricing, petrol prices in India have been aligned with international crude oil prices on a daily basis. Just like gold price, any minute change in global crude oil price would impact fuel price in India.
Crude oil price is dynamic in nature as it is dependent on various factors such as demand and supply metrics, climatic conditions and political stability in oil-producing countries. Petrol price in Tuticorin is calculated based on the rate at which international crude oil is being traded.
For instance, petrol price in Tuticorin today will be calculated based on yesterday’s international crude oil price of Indian basket which is typically computed by Petroleum Planning and Analysis Cell (PPAC). Crude oil is usually purchased in barrels (1 oil barrel = 159 litres), based on which petrol price per litre will be calculated.
- Currency Exchange Rate: Just like gold trading, oil trading across the globe happens in US dollars. Each barrel of oil shall be bought in US dollars. Hence, while computing petrol price in Thoothukudi, each US dollar will be converted into Indian rupee, based on the dollar to rupee exchange rate prevailing on a particular day. The fluctuating nature of dollar thus shows the impact on the petrol price on a daily basis. Whenever the dollar strengthens, we need to spend more of Indian currency to purchase fuel. Increasing dollar rate is inversely proportional to petrol price in Tuticorin.
- Central Government Excise Duty: One of the primary factors that affect the petrol price in Tuticorin at domestic level is the excise duty levied by the central government on every litre of petrol sold in the country. The tax remains same across all Indian states. Currently, the government charges excise duty of Rs.19.48 per litre of petrol.
The recent revision of excise duty happened on 2 February 2018. The government announced the reduction in excise duty on petrol and diesel by Rs.2 during the Union budget 2018 session.
- Tamil Nadu State Tax on Petrol: The state taxes on petrol are decided by the respective state governments and will be levied as a percentage on basic petrol price. With respect to Tuticorin, Tamil Nadu state government currently levies 32.06% value-added tax (VAT) on every litre of petrol sold in the state. While the international crude oil price constitutes half the price of the petrol, the remaining half is due to the state and central taxes levied on the fuel.
- Profit Margins of Oil Companies: Though not a major contributor, the profit margins of Indian oil companies, which control the downstream oil market in India, do affect the petrol price in Tuticorin. However, the effect may not be on a regular basis.
State-owned oil companies in India, including Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum, occupy 90% of market share. These companies purchase oil in crude form and refine it to extract petrol. Hence, they add refining costs, transportation costs, marketing costs, as well as profit margins to the cost price of crude oil before selling it to petrol pump dealers.
- Dealer’s Commission: Petrol pump dealers purchase the refined petrol from the oil companies, add the transportation costs, dealer’s commission, station maintenance costs, etc., to the cost price of petrol before selling it in their stations. The dealer’s commission is typically decided by the oil companies and will be revised once every year. It is levied in terms of rupees for every litre of petrol.
The reason for the petrol price in Tuticorin to be different from one petrol pump to another is due to the dealer’s commission, which may vary from one dealer to another, and fuel transportation costs. A petrol pump located close to the oil refinery may charge less compared to the stations located far from the refinery.
Breakdown of Petrol Price in Tuticorin, Tamil Nadu
Using the factors listed above, let’s see how the petrol rate in Tuticorin on 17th April 2018 is calculated.
|1||International crude oil price along with ocean freight charges||$77.82 per barrel = Rs.31.84/Litre (considering $1=65.07 and 1 barrel oil = 159 litres)|
|2||Oil company’s margin, transportation, refining and freight cost||Rs.3.31/Ltr|
|5||Value added tax (VAT)||Rs.18.60/Ltr|
|Total||Retail selling price of petrol at Tuticorin||Rs.76.83/Ltr|
Frequently Asked Questions (FAQs) on Petrol Price in Tuticorin
- Why does petrol price in Tuticorin change every day?
- Why are petrol prices in Tuticorin higher compared to petrol prices in some north Indian states?
- Where do I get the cheapest petrol in Tuticorin?
Petrol price in Tuticorin, just like in any other Indian city, changes on a daily basis due to the dynamic fuel pricing model. Implemented in June 2017, the dynamic fuel pricing mechanism revises the petrol prices in Tuticorin based on the previous day’s international crude oil price and currency exchange rate. The revised priced will be updated at the petrol stations at 6 a.m. every day.
The dynamic pricing model was implemented to make the domestic oil prices align with the international crude oil prices so as to pass even the minute benefit in the crude oil price to the end consumers on a daily basis. The pricing mechanism further brings transparency in fuel pricing, which was earlier under the control of state-owned oil companies who used to revise the rates on fortnightly basis, by considering the average rate of crude oil.
An important factor that affects the petrol price in Tuticorin compared to all other states is the value-added tax (VAT) levied on petrol by Tamil Nadu state government. Since each state charges different amount of VAT per litre of petrol, the petrol prices would be higher in the states that collect higher VAT compared to the other states that charge lesser VAT.
With the regards to Tuticorin, the city collects VAT on petrol as per the percentage decided by the Tamil Nadu state government. As the VAT collected in the state is higher compared to some north Indian states such as Uttar Pradesh, Jharkhand, Chattisgarh, Delhi, Haryana, etc., petrol price in Tuticorin is a bit higher.
Petrol price across the Thoothukudi city remains the same with just minute differences. However, the state-owned fuel stations including Indian Oil, Hindustan Petroleum, and Bharat Petroleum offer best petrol price in Tuticorin compared to private counterparts like Essar. Among the public sector players, Indian Oil offers the cheapest petrol in Thoothukudi.
*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.