Connect with us

Petroleum Industry

There will be no relief in Fuel prices soon

Published

on

There will be no relief in Fuel prices soon

In the recent one year, the prices of petrol and diesel have reached an all-time high. Due to this, opposition party protested on Monday, the government managed out any immediate reduction in excise duty to reduce retail prices of auto fuels and rather requested the state to take action. However, Andhra Pradesh declared a Rs 2 per litre cut in the VAT on petrol and diesel just after Rajasthan’s announcement of a 4% point cut Sunday, states have been fully uninterested.

Why it is hard for the government to cut taxes on auto fuels?

Taxes obtained from petrol and diesel are the main revenue source for central as well as state government, and a cut will affect the financial position.

The Centre has obtained Rs 2.29 lakh crore from excise duty on petroleum products in 2017-18 and Rs 2.42 lakh crore in 2016-17. Presently, the excise duty on petrol is Rs 19.48 per litre and on diesel, it is Rs 15.33 per litre. The Centre has increased the excise duty 9 times between November 2014 to January 2016 to grow its finances as worldwide oil prices fell. The Centre reduced the excise duty just once by Rs 2 per litre in October 2017.

Crude petroleum obtains 20% oil industry development cess and a National Calamity Contingent Duty (NCCD) of Rs 50 per metric tonne. Presently, there is zero customs duty on crude, however, petrol and diesel have a customs duty of 2.5%.

Rates of the state sales tax or Value Added Tax (VAT) differ in each and every state. For example, a state having higher VAT taxes causes the government to earn more profit.

Apart from taxes, the Centres and States also earn other earnings also from the petroleum sector. Summing up dividend income, dividend distribution tax, corporate/income tax and profit on an exploration of oil and gas, the Centre’s total earnings from crude and petroleum products were Rs 3.43 lakh crore in 2017-18 and Rs 3.34 lakh crore in 2016-17. Apart from dividend income, the state governments earnings from the crude and petroleum products remained at Rs 2.09 lakh crore in 2017-18 and Rs 1.89 lakh crore in 2016-17.

Also Read: Uplodefoodie offers food outlets a Digital Makeover

Could involvement of petrol and diesel under GST transform the condition?

Presently, LPG, kerosene, naphtha, furnace oil, and light diesel fall under the GST regime. While, petroleum products such as crude oil, high-speed diesel, motor spirit (petrol), natural gas, and aviation turbine fuel doesn’t fall under the GST regime. None of the state or central government approached to include these in GST regime.

Despite the fact, the petrol and diesel are included in the GST regime, prices will not fall at all. This is just because of GST rule of keeping the price same as to earlier tax rates. Sushil Kumar Modi, one of the members of the GST council stated that bringing petrol and diesel under GST would not have a big impact on prices, as states will levy additional taxes to boost revenues.

He further added, “Most people feel that if we put petroleum products under GST then the highest slab of 28% will be levied and prices will come down. [In fact,] It will affect prices only in a minor way.” As per trend worldwide, Sushil Modi stated, is that if the petrol and diesel are included under GST, states levy extra taxes, over and above to prop up revenue”. “If they (states) forego (tax), how will they earn revenue?” he asked.

Read More: Power2SME has made a Partnership with FTAPCCI

Is it true that if the government does not cut prices, it will have insulted its finances from erosion?

Most probably not. The Centre still has to bear direct costs of all the fuel product which are not market-linked. Kerosene and LPG prices are under government hand and they are providing subsidies in order to support weaker sections of society.

Lastly, an increase in oil prices and capital outflows will raise inflation and this will directly impact on the government’s borrowing costs.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Petroleum Industry

No relief from higher fuel prices despite rate cut

Published

on

By

No relief from higher fuel prices despite rate cut

Despite the centre declaring Rs 2.50 per litre decrease in the prices of fuel, the common man is unable to experience any relief, because of ever-increasing prices of petrol and diesel.

Fuel Prices continued to increase on Tuesday, with petrol being sold at 23 paise more at Rs 82.26 per litre and diesel at Rs 74.11 per litre after the price hike in New Delhi.

While in Mumbai, petrol prices have reached Rs 87.73 per litre and diesel at Rs 77.68 per litre after a hike of 23 paise and 31 paise respectively.

By considering the scenario of ever-increasing fuel prices, Finance Minister Arun Jaitley, in the beginning of the month had declared a cut of Rs 2.50 per litre on both petrol and diesel prices and commanded the state governments to implement the same.

Also Read: Flipkart teams-up with Bajaj Allianz to provide mobile insurance

After this announcement, modification of petrol prices is being implemented in states such as Assam, Bihar, Chhattisgarh, Goa, Gujarat, Jharkhand, Jammu Kashmir, Himachal Pradesh, and Uttar Pradesh. The revision is yet to be implemented in rest all the states across the country.

Prices of Petrol and Diesel are continuously increasing since the last 3 years. There has been a decrease in the prices of fuel only 1-2 times since then. Prices of fuels are burning holes in the pockets of the citizens.

Before a month, petrol prices have reached an all-time high in September. On September 10, 2018, petrol costs Rs 88.12 per litre in Mumbai, which is all time high as compared to petrol prices on September 14, 2018.

Also Read: Zomato leads in food delivery space with 21 million monthly order run rate

Continue Reading

Petroleum Industry

Govt plans to mix Methanol with LPG to cut subsidy bill by 30%

Published

on

By

Govt plans to mix Methanol with LPG to cut subsidy bill by 30%

The government is thinking of a plan to sell LPG mixed with methanol, which may help to reduce its cooking gas subsidy by about one-third as compared to the existing prices.

As per the details of some countries, mixing 20% of methanol with LPG can help to bring the cost of cooking gas for household consumption by Rs 100 a cylinder.

The portion of methanol in the mix can be increased as India improves production of methane from coal. Moreover, there will also be financial benefits, looking over the country’s LPG subsidy bill which is estimated to be more than Rs 20,000 crore in the fiscal 2019 budget.

The government has distributed suitable coal mines for the production of methane – methanol in its liquid form. This step was taken just after NITI Aayog arranged roadmap for a methanol economy for the country. This will reduce fuel import bill in both automotive and household sectors.

Also Read: Walmart Foundation to invest Rs 180 crore to improve farmers’ livelihood

The whole project may be handled by the NITI Aayog. The outlines of the project are talked between the members of think tank and union minister Nitin Gadkari, who has been given the task to promote alternative fuels in the country.

Presently, the LPG consumers have to buy the fuel at the market price. The government provides subsidy on 12 cylinders of 14.2-kg per each household a year, transferring the subsidy amount instantly into the bank account of the user.

The subsidy amount differs every month based on the charges in average international benchmark LPG rate and foreign exchange rate. When international rates are high, the government provides more subsidy. The subsidy per cylinder in August was Rs 291.48 per cylinder and it was
Rs 257.74 in July.

India’s LPG consumption reaches to 2 mt a month, increasing constantly in the last 2 years due to the government’s push towards increasing access of LPG under Pradhan Mantri Ujjwala Yojana (PMUY). More than half the country’s demand is met with imports.

Also Read: Haryana government signs deal with Indian Oil Corporation to set up bio-CNG plants

According to the NITI Aayog’s ‘methanol economy’ roadmap, there can be an annual decrease of $100 billion in crude imports by 2030, if the country moves to 15% mixed fuel, both for transportation as well as cooking. The goal is to produce methanol from highly available low-quality coal and different bio resources and also manufacture it artificially.

From this, it is expected that the increasing demand of methanol can be met locally.

Source

Continue Reading

Petroleum Industry

Haryana government signs deal with Indian Oil Corporation to set up bio-CNG plants

Published

on

By

Haryana government signs deal with Indian Oil Corporation to set up bio-CNG plants

Haryana Government on Thursday signed a memorandum of understanding (MoU) with Indian Oil Corporation (IOCL) for establishing new bio-CNG plants depending on the paddy straw and various other agri-waste in the state. The first compressed biogas plant (CBP) is most probably going to be built in Kurukshetra.

The contract was being signed on behalf of Chief Minister Manohar Lal Khattar is going to open opportunities for developing about 200 CBPs in the state until 2023, with an overall capacity of 1,000 tonnes per day of compressed biogas, one of the official statement said.

By opening new plants, there will be an annual production of around 4 lakh tonnes of compressed biogas per annum, it said.

Shailendra Shukla who is the Chairman of Haryana Renewable Energy Development Agency (HAREDA) signed the MoU in presence of state government, however, Executive Director Subodh Kumar signed in presence of IOCL.

Also Read: India, Morocco sign contract to expand collaboration in MSME sector

Subodh Kumar also demanded the chief minister to put foundation stone on the first compressed biogas plant in Kurukshetra in November 2018. He also mentioned that by signing the contract, the IOCL would start work on the setting up of this plant.

The main purpose of government is to promote agriculture waste which depends on biomass or waste to compressed biogas or Bio CNG plants in order to solve the issue of crop residue burning and scientific disposal of agriculture waste. This will help to increase farmers’ income by sale of crop residue and also help to generate new rural employment opportunities.

P K Mahapatra, who is the Additional Chief Secretary, New and Renewable Energy stated, the generation of compressed biogas on a commercial scale will have some amazing pros, such as reducing pollution due to crop burning and offering an economic option to the crop residue, providing more sources of revenue to farmers, rural employment and value creation in the rural economy.

He further stated that the compressed biogas is almost identical to the currently available CNG in its composition and energy potential. This means it can be used as a green automotive fuel.

Kumar mentioned that around 100 tonnes per day of argo residue when feed into the biogas plant can produce around 10 TPD compressed biogas and 30 TPD dry manure. The cost to set up this kind of plant is around Rs 35 crore and it needs 6-10 acres of land.

Also Read: Facebook to host First “India Startup Day” in Delhi on October 9

Their main purpose is to promote compressed biogas with around 96% methane content which is absolutely better than CNG (around 86% methane) and would have better combustion qualities.

Source

Continue Reading

Latest News

Apps4 weeks ago

Best Apps for Diwali Whatsapp Story

As we see the craze of social media getting increasingly more and more with time, we also see the emergence...

Market Research1 month ago

Is it compulsory according to the new law to wear a helmet in India while driving a bike?

Riding a bike on Indian roads is a very big matter of concern, as we all know that Indian roads...

Market Research4 months ago

Building Thermal Insulation Materials Market Size, Top players, Global forecast 2019-2025 : Research Study

The “Building Thermal Insulation Materials Market” report offers a thorough examination of the diverse patterns and factors affecting the development...

Market Research4 months ago

Global Cervical Forceps Sales Market Size and Value Report, 2019-2024 Forecast: Teleflex Incorporated, Pelican Feminine Healthcare, CareFusion (Becton Dickinson), GPC Medical, Medline Industries

The fresh report namely, Cervical Forceps Sales Market Size , Status and Forecast 2019-2028 furnishes essential information on every aspect...

Market Research4 months ago

Alkali-Swellable Acrylic Polymers Sales industry report – Size, Value, Market Share – Research and Analysis 2019

The Global Alkali-Swellable Acrylic Polymers Sales Report comprises thorough insights into the global Alkali-Swellable Acrylic Polymers Sales industry that not...

Market Research4 months ago

Hindered Amine Light Stabilizers Market Forecast, Market Share, Segmentation Analysis For Polymeric, Monomeric, Oligomeric Segments

The Hindered Amine Light Stabilizers market is growing by leaps and bounds. In spite of the volatile economic conditions because...

Market Research4 months ago

Animal Feed Additives industry report – Size, Value, Market Share – Research and Analysis 2019

The Global Animal Feed Additives Report comprises thorough insights into the global Animal Feed Additives industry that not only aids...

Trending

Copyright © 2017 Zox News Theme. Theme by MVP Themes, powered by WordPress.