Diesel Price In India
Diesel Price in India
Diesel is one of the widely used fuel oils in India. Popular for its efficiency and mileage, the petroleum distillate is used to power motor vehicles and equipment installed with diesel engines or compression-ignition engines.
Daily Revision of Diesel Prices or Dynamic Fuel Pricing
From 16 June 2017, the dynamic fuel pricing model revises both petrol and diesel prices on a daily basis based on the previous day’s international crude oil price and currency conversion rates.
Prior to dynamic pricing, the revision used to happen fortnightly, i.e., on the 1st and 16th of every month based on the average international crude oil price in the preceding fortnight.
By adopting dynamic pricing India joined other developed countries like the US and Australia, where the pricing model is already in use.
The daily revised diesel prices will be updated by the fuel stations at 6 a.m. every day.
The move is to ensure that even the smallest benefit from the change in the international oil prices is passed to the dealers as well as to the end consumers on a daily basis. It will also bring transparency in fuel pricing and will minimize the impact on the dealers who often deal with fluctuating fuel prices.
How to Find Diesel Price Every Day?
With the daily revision of fuel prices in place, you may have to pay a different price every time you fill your vehicle. While the prices in the automated fuel stations will be changed centrally, the non-automated pumps have to change them manually.
The non-automated fuel stations and consumers can access the updated daily price through various means such as –
- Mobile app – By downloading apps of state-owned oil manufacturing companies (OMCs), one can fetch daily updated prices of both diesel and petrol at all cities in India. Fuel@IOC is the mobile app of Indian Oil Corporation (IOC), SmartDrive is for Bharat Petroleum (BP), and for Hindustan Petroleum (HP) it is MYHPCL.
- SMS service – Consumers can send a text message in a specific format with the dealer code to get the daily diesel price at specific fuel stations
- For IOC dealer diesel price, sms RSP< SPACE >dealer code to 9224992249
- For BP, RSP< SPACE > dealer code to 9223112222
- For HP, HPPRICEdealer code to 9222201122
The dealer code is usually displayed at the fuel stations, in the absence of which consumers can ask for the same at the station or get it from the respective OMC website.
- OMC’s Websites – Customers can also visit the official websites of respective OMCs to find the diesel price.
Various Components That Add up to Diesel Price in India
Though diesel is widely used across the country, very few customers actually know that the price of the diesel when purchased in crude form is less than half the price of what they typically pay at the fuel station?
Yes, when Indian oil manufacturing companies (OMCs) import crude oil (raw material for petrol/diesel) from other countries, they pay a nominal price per litre. Many a times it is less than Rs.25 per litre. Then what is adding up to make it thrice the original price.
Well, there are more than a couple of components that add up to the actual fuel price making it heavier on Indian pockets.
The components that contribute to the retail selling price of diesel include –
- Cost of crude oil + cost and freight (C&F) charges
- Refinery transfer price (RTP)
- Price charged to dealers
- Central and state taxes
- Dealer commission + other charges
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- Cost of crude oil + cost and freight (C&F) charges
India is the third largest oil consumer in the world. According to Petroleum Planning and Analysis Cell (PPAC), the country’s fuel consumption grew to 194.2 million tonne (Mt) in 2016-17. Of the total, diesel consumption accounts to 74.6Mt, making it the most consumed fuel.
Despite being one of the major oil consuming nations, India produces only 25% of its total crude oil requirements. As a result, the country has been increasingly depending on crude oil imports which meet nearly 76% of its requirement.
Most of the oil is imported from OPEC nations including Saudi Arabia, United Arab Emirates, Nigeria, Iraq, Iran, Kuwait, Angola, Malaysia, Indonesia, and off-late from the United States.
The journey of diesel, thus, begins with the purchase of crude oil from other countries which usually sell the oil in barrels for US dollars.
Indian OMCs pay the crude oil price plus the cost and freight charges to the foreign oil companies, which forms the base rate of the oil.
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- Refinery Transfer Price (RTP)
The purchased crude oil is then sent to the refineries for further processing to extract petrol and diesel. The OMCs pay a certain amount of fee to the refineries for every litre of petrol/diesel processed. The fee is called refinery transfer fee (RTP).
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- Price charged to dealers
The OMC then sells the refined diesel to local dealers, which are usually fuel station owners, by adding some profit margin to the actual cost. From then the dealers become owners of the fuel.
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- Central and state taxes
The dealer then adds two different taxes – the Central Excise Duty levied by the Central Government and the Value Added Tax (VAT) imposed by the state government. While the excise duty remains fixed across India, VAT is something which varies from state to state. The variation in fuel price from state to state is mainly because of this component.
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- Dealer Commission + other charges
The final step is to add dealer’s commission and the air ambience charges to get the final retail selling price of diesel. The variation of diesel price from fuel station to station is mainly due to variation in dealer’s commission and other transportation charges involved.
Price Break up of Diesel
The data is as on 24 Sep 2017 in Delhi at IOCL retail pump outlet
| Components of Diesel Price Break-up | Unit | |
| Cost & Freight (C&F) Price | $/bbl | 68.92 |
| Average Exchange Rate | Rs/$ | 64.09 |
| Trade Parity Landed Cost Based on Daily Pricing Methodology (Price paid OMCs to refineries) | Rs/Lt | 28.16 |
| Marketing Cost, Margin, Freight and Other Charges | Rs/Lt | 2.06 |
| Price Charged to Dealers | Rs/Lt | 30.22 |
| Excise Duty | Rs/Lt | 17.33 |
| Dealer Commission | Rs/Lt | 2.50 |
| VAT applicable for Delhi @ 16.75% + Rs. 0.25/Lt pollution cess | Rs/Lt | 8.67 |
| Retail Selling Price at Delhi | Rs/Lt | 58.72 |
Factors Affecting Diesel Prices in India
Major factors that affect diesel price include – international crude oil price, exchange rate and taxes.
- International crude oil price: The primary factor that affects the diesel price is the crude oil price in the international market. The crude oil prices are typically determined by various factors including worldwide demand and supply, global economic conditions, seasonal and climatic changes, political instability in oil-producing countries. Let’s look at them in detail –
- Increased demand: The same demand and supply phenomenon applies even for the diesel price. The higher the demand when the supply is short, the higher the price of diesel. Similarly, high supply and less demand will lead to a reduction in prices.
- Seasonal and climatic changes: Whenever there is a change in season, oil refineries tend to conduct maintenance activities which may partially affect the production activities leading to lesser supply and higher price.
Severe weather changes or natural calamities such as cyclones and hurricanes may also affect both drilling and production activities leading to oil shortage. Sometimes transportation facilities are also affected resulting in less refined gasoline.
- Devaluation of US dollar: As crude oil is traded in US dollars and the dollar being the most stable currency, directly affects the global oil prices. Whenever dollar gains strength, there would be a drop in the value of oil and other dollar-denominated commodities and vice versa.
- Political instability: Any geopolitical tension that affects the oil production throughout the world or in the oil-producing countries will show a direct impact on the fuel prices. The recent tensions between the US and North Korea have a significant impact on the dollar which in turn resulted in fluctuating fuel prices.
- Exchange rate: The crude oil is typically bought in US dollar, therefore, any change in India’s exchange rate and the US dollar will affect the buying cost of crude oil hence would impact the selling price in India.
- Central and state taxes: Whenever there is a change in state and central tax on fuels it would be reflected in the retail selling price of diesel. As different states have different VAT rate, the rate of diesel varies from state to state.
| City | Diesel ( / liter) |
| AMBALA | ₹ 65.59 |
| BANGALORE | ₹ 66.19 |
| BHOPAL | ₹ 68.49 |
| BHUBANESHWAR | ₹ 69.83 |
| CHANDIGARH | ₹ 63.19 |
| CHENNAI | ₹ 68.67 |
| DEHRADUN | ₹ 65.4 |
| DELHI | ₹ 65.09 |
| FARIDABAD | ₹ 66.18 |
| GHAZIABAD | ₹ 65.16 |
| GURGAON | ₹ 65.96 |
| GUWAHATI | ₹ 67.94 |
| HYDERABAD | ₹ 70.72 |
| JAIPUR | ₹ 69.4 |
| JAMMU | ₹ 66.28 |
| KOLKATA | ₹ 67.78 |
| LUCKNOW | ₹ 65.24 |
| MUMBAI | ₹ 69.31 |
| NOIDA | ₹ 65.27 |
| PATNA | ₹ 69.71 |
| PONDICHERRY | ₹ 67.21 |
| RAIPUR | ₹ 70.3 |
| RANCHI | ₹ 68.76 |
| SHIMLA | ₹ 64.73 |
| SRINAGAR | ₹ 68.41 |
| THIRUVANANTHAPURAM | ₹ 70.63 |
