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NEW DELHI: Amid record-high fuel prices, finance minister Nirmala Sitharaman on Monday said there is no proposal as of now to bring crude oil, petrol, diesel, jet fuel (ATF) and natural gas under the Goods and Services Tax (GST).This meant that the central government continued to levy excise duty on them while state governments charged VAT. These taxes, with excise duty, in particular, have been raised periodically.
As the festivals enter the door of India, demand for diesel rose by 6.6% and petrol by 4% in October. The increased transportation of goods during the season is the most crucial factor for the driven up demand. Refineries across the country have also started to gain pace as Indian Oil Corporation Ltd, the nation's largest refiner saw a rise of 94% run from below 50% since April.
U.S. oil major Exxon Mobil on Tuesday has signed an agreement with Global Clean Energy to buy 2.5 million barrels of renewable diesel per year for five years to help reduce its carbon footprint. Exxon plans to distribute the renewable diesel within California and potentially to other domestic and international markets. The renewable diesel will be sourced from Global Clean Energy’s refinery in Bakersfield, California, starting 2022.
If sources were to be believed, senior government functionaries have directed state-owned oil marketing companies (OMCs) to keep the daily price movement of Diesel and Petrol in check until elections. To achieve this, a portion of the price hike in the international market will be absorbed by the country. The new move is believed to avert any resistance on the grounds of a frequent increase in fuel prices.
US oil supermajor, ExxonMobil is all set to pour £500 million to upgrade Britain’s largest oil refinery and extend its facility. Almost a century-old Fawley refinery will see the addition of new oil processing units, enabling it to produce larger volumes of high-quality diesel. The upgradation is in line with Exxon’s growth plans to double earnings by 2025 with Fawley marked as a “strategic” site.
A PTI report has claimed that major revenue loss will make the addition of Petrol and Diesel into the GST regime less likely, citing disapproval from the central and state governments. Petro-products were excluded from the GST regime which came into force on July 1st, 2017. Currently, the highest VAT on petrol is levied in Mumbai, at 39.12%.
Increasing crude rates and weakening rupee against dollar are now providing the support for petrol and diesel prices in India to continue their 4-day streak of hike. Petrol and Diesel in the capital city, New Delhi were priced at ₹76.13 and ₹67.86 per litre. PPAC data shows that the crude oil basket of India averaged ₹ 73.85 in June; while the INR fell to ₹ 68.87 against the U.S. dollars.
Petrol and diesel prices in India are experiencing consecutive falls since they escalated on May 29. According to the Indian Oil website, diesel prices came down by 15 paise in Delhi and 16 paise in Mumbai. Based on the global oil prices, continuous revisions are being done for petrol and diesel prices by oil marketing firms. Prevailing VAT determines the price in every state.
The oil prices were reduced for a consecutive third day in India. The prices for petrol and diesel dropped by 6 paise and 5 paise per litre today, and now petrol costs Rs 78.29/litre, while diesel costs Rs 69.20/litre, in New Delhi. The state government of Kerala, however, has decided to cut petrol and diesel prices by Re 1, with effect from today, resulting in a Rs. 509cr revenue loss.
The Brazilian government has responded to a week-long national truckers' strike, which led to fuel and food shortages across the country and ceded to protesters' demands yesterday. Diesel prices in Brazil were cut by 46 Brazilian cents ($0.13; £0.09) per litre. According to the daily Folha de Sao Paulo, the first five days of the strike have cost the country's economy an estimated $2.8 billion.
Petrol and Diesel prices scaled up new highs when they turned to Rs 84.40 and Rs 72.21, respectively, in Mumbai. According to the price notification issued by state-owned oil corporations Petrol price today increased by 33 paisa/litre in the country - the highest since the daily price revision went effective in June 2017, and diesel by 26 paisa.
The Petroleum Planning and Analysis Cell (PPAC) of the Indian Oil Ministry has disclosed that the countrywide fuel consumption for the month of April totaled to 17.67 million tonnes. This indicates a rise in India’s fuel demand by 4.4%, and is owed to the surge in cooking gas (LPG) and auto fuel consumption. The data from the PPAC also showed an increase in Petrol, Diesel, ATF and other fuels.
IOCL Chairman Sanjiv Singh clarified to the reporters that the decision of oil PSUs not to hike petrol and diesel prices was aimed at stabilising the prices. He said, "We strongly believe this was unrealistic. So, we thought of stabilising that, tapering it down to a certain extent. Now incidentally it has coincided with some of the state elections. It was not the intention (of oil marketing companies)."
India’s top oil refiner, Indian Oil, has developed its own refining processes using catalysts and hydro-cracking for converting crude oil into fuels like gasoline, diesel and liquefied petroleum gas. This move may help the firm save at least $1.5 billion in terms of cost. The director of research and development at Indian Oil believes that the firm will soon turn into a technology provider in near future and would not have to be at the mercy of a few multinational suppliers.