import parity pricing till 1975 administered pricing mechanism (apm)

Import parity pricing till 1975

Administered Pricing Mechanism (APM)

Started in 1975 basis OPC recommendations

Modified in 1984 basis OCRC recommendations

Phased dismantling of APM

Commenced in 1998

APM for refineries and indl. products dismantled in 1998

Marketing of ATF deregulated in April 2001

Full dismantling effective April 2002

Evolution of

Pricing

Decontrol of Lube pricing in November 1993

Refinery transfer prices (RTP) of products on Import

Parity Principle (IPP)

RTPs of MS & HSD on Trade Parity effective June 2006

Limited subsidies on PDS SKO and Dom. LPG from

Govt. budget

Revision in selling prices of MS, HSD, PDS SKO & Dom.

LPG basis Govt. approval

Selling prices of other products market determined

Pricing Post APM Dismantling

Import Parity Pricing (IPP)FOB & Premium ($/bbl)

(Basis Published Quotes by Platts and Argus)

Ocean Freight ($/MT) (Middle East to Port Refinery Location)

Exchange Rate (Rs./$)(for conversion of $ prices to Rupees)

Import Duties (As applicable from time to time )

Import Incidental Elements(Ocean Loss, LC Charges, Insurance, Wharfage etc.)

= Import Parity Price

Export Parity Pricing (EPP)

FOB & Premium ($/bbl)(Basis Published Quotes by Platts and Argus)

Exchange Rate (Rs./$)(for conversion of $ prices to Rupees)

Advance Licence Benefit on Crude (Rs/KL)(Based on Custom Duty of Crude)

= Export Parity Price

Trade Parity Pricing (TPP)

80% of Import Parity Price

20% of Export Parity Price

= Trade Parity Price

Refinery Transfer Pricing

Port Refineries at Jamnagar, Mumbai, Kochi, Mangalore, Chrennai, Vizag & Haldia are the Primary Pricing Points.

Non refinery ports of Kandla and Paradeep also are the primary pricing points.

Smaller ports treated as secondary pricing points & linked to Primary Pricing Points e.g.

Goa - Mumbai plus Coastal Freight Tuticorin - Chennai plus coastal freight

NE Refineries are at par with Haldia RTP.


Refinery Transfer Price for Inland refineries (Koyali,Mathura etc) based on RTPs of nearest primary port plus Inland freight differential :

MS & HSD & LPG - 75% of railway freight for rail distance from nearest primary pricing port

SKO – 90% of railway freight for pipeline distance from nearest primary pricing port

Other Products – Lumsum amount for inland freight differentials


Periodicity of Revision:

RTP of MS, HSD, FO & LSHS, Naphtha,

Bitumen, ATF(Domestic) etc. revised fortnightly

RTP of ATF (International), SKO & LPG revised

monthly

RTP of Speciality Products – Hexane, Solvant,

JBO,MTO etc.are revised Monthly.


MS BS II Mumbai

FOB AG(Including Prem.) $/BBL 72.77

Freight (Sitra to Indian Port) $/BBL 0.92

C&F Price $/BBL 73.69

Rs./KL 22407.15

Custom Duty Rs./KL 583.34

Other Charges (Insurance, Ocean Loss etc.) Rs./KL 229.80

IPP Rs./KL 23220.29

Buildup of RTP as on 1st July 09

MS BS II Mumbai


FOB Price Rs./KL 22128.29

EPP Rs./KL 22128.29

RTP Rs./KL 23001.91


Quality premium factor is added to BS II RTP to workout EURO III RTP.

Mumbai


Freight (Sitra to Indian Port) $/BBL 1.05

C&F Price $/BBL 79.59

Rs./KL 24124.07

Custom Duty Rs./KL 628.03

Other Charges (Insurance, Ocean Loss etc.) Rs./KL 250.30

IPP Rs./KL 25002.40

HSD BS II


HSD BS II Mumbai


FOB Price Rs./KL 23806.02

EPP Rs./KL 23806.02

RTP Rs./KL 24763.12


Quality premium factor is added to BS II RTP to workout EURO III RTP.

Component Amount% of RSP

Basic Price 22.15 50

Excise Duty 13.75 31

Sales Tax 7.44 17

Dealer Commission 1.05 2

Freight & Others 0.24 0

Total Retail Selling Price 44.63 100

Taxation contributes to 48% of RSP of MS

Composition of RSP of MS at Delhi As on 2nd July 2009

Component Amount% of RSP

Basic Price 24.39 74

Excise Duty 3.71 11

Sales Tax & Air Ambiance charges 3.90 12

Dealer Commission 0.63 2

Others 0.24 1

Total Retail Selling Price 32.87 100

Composition of RSP of HSD at Delhi As on 2nd July 2009

Taxation contributes to 23% of RSP of HSD

Govt. Subsidy

on

PDS SKO & Domestic LPG

Issue Price

Ex- Storage Selling Price

Notional Rail Freight

Cost Price

RTP at Port Refineries

Freight from Port to inland depots/ LPG plants

Terminalling Charges

Mktg. Cost & Margins

LPG Bottling Cost & Cyl. Depreciation

Subsidy = Cost Price - Issue Price

Subsidies on SKO & LPG

Under Recoveries

on

Sensitive Products

Domestic Product Prices

OMCs paying Trade/ Import parity prices to refineries for

supply of products

Consumer prices of Sensitive products not being

maintained in line with Trade/ Import parity prices

resulting in under recoveries to OMCs due to:

Non recovery of cost of products

Non realization of margins allowed

Rising Under Recoveries

Rs.Crs

Industry U/R : 20146 40000 49387 77123 103292

21311OMC

Compensation of Under Recovery

Subsidy Sharing Mechanism commenced in 2003-04 with

1/3 sharing of under recoveries by Upstream Companies

Restricted to under recoveries on PDS SKO & Dom. LPG

Effective 2004-05, upstream sharing extended to MS / HSD also

In view of the adverse financial position due to increasing under

recoveries, Govt. started issuing oil bonds to OMCs.

Bonds Received by OMC Rs. Crores

2005-06 23452006-07 49302007-08 7703

2008-09 14693

Mumbai

FOB AG $/MT 389.13

Freight (Sitra to Indian Port) $/MT 11.56

C&F Price $/MT 400.69

Rs./MT 19308.78

Custom Duty Rs./MT 1048.80

Other Charges (Insurance, Ocean Loss etc.) Rs./MT 291.23

RTP (Rounded off)(Next Re10) Rs./MT 20740.00

FO (380 CST Dom.)


Marketing Cost & Margin of Rs. 2090/MT is added to RTP to workout BCSP.

Mumbai

FOB AG $/MT 389.13



Rs./MT 19308.78

Custom Duty Rs./MT 0



FO (380 CST Int.)



Mumbai

FOB AG $/MT 391.91



Rs./MT 19462.19




CBFS


Marketing Cost & Margin of Rs. 1000/MT for Carbon & Rs 4000 for Non Carbon Black Manufactures is added to RTP to workout BCSP.


RPO RTP

Divide : Conversion factor of 1.01

= RTP of RPO ( in KL) (Rounded off) )(Next Re 10)

RTP of CBFS (in MT)

Mumbai

FOB AG $/MT 391.91



Rs./MT 19442.75



Add : Additional Margin Rs./MT 1500.00


LSHS (Fert. & Non Fert.)



Mumbai

FOB AG (Including Premium) $/MT 581.62



Rs./MT 28404.29



RTP (Rounded off) Rs./MT 30980.00

Naphtha NF



Mumbai




Rs./MT 28404.29




Naphtha Fer.



Mumbai




Rs./MT 30604.29




Naphtha For Power Plant



Mumbai

FOB AG of Naphtha(Monthly) $/MT 568.34

Add : Escalation @ 27% $/MT 153.45

Add : Premium of Naphtha $/MT 46.10



Rs./MT 37380.62



Less : Premium Adjustment Rs./MT 750.00


Hexane/Solvant 1425


Mumbai

FOB AG $/MT 392.50



Rs./MT 19656.70



Less : Package Differential Rs./MT 1710.00


Bulk Bitumen Grade- ( 60/70)

Buildup of RTP as on 01July 09

Mumbai

RTP of FO Rs./KL 20035.00

RTP of FO (Con. Factor 1.0424) Rs./MT 20884.48

RTP of HSD BS II Grade Rs./KL 24699.87

RTP of HSD Grade(C. V. 1.99) Rs./MT 29615.34

RTP of FO Grade (100 % FO + 25% HSD) Rs./MT 28288.32

Conversion Factor (MT to KL) 1.3422

RTP of FO Grade Rs./KL 21076.84

Add : Processing Cost Rs./KL 120.00

RTP Rs./KL 21196.84

RTP (Rounded off) Rs./KL 21200.00

LVFO/FO 600


Mumbai

80 % of Avg. RTP of HSD Rs./KL 19653.82

20% of Avg. RTP of Fo Rs./KL 4046.29

RTP of LDO(R/off) Rs./KL 23710.00

Add : Marketing Cost & margin Rs./KL 6260.00

BCSP of LDO Rs./KL 29970.00

LDO


Mumbai

FOB (based on Singapur) $/MT 672.50

Freight $/MT 25.00

Insurance & Landing Charges $/MT 17.44

CIF Price $/MT 714.94

Custom Duty $/MT 35.75

Port Price $/MT 750.59

Rs/MT 40632.00

Port Price (CF 0.8938) Rs/KL 32562.00

Less : Quality Correction Rs/KL 1410.00

Less : Sales Tax Reduction Rs/KL 1198.00

RTP (Rounded off) Rs/KL 30000.00

LOBS – SN 500


import parity pricing till 1975 administered pricing mechanism (apm)

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