PRICING

Administered Pricing Mechanism (APM)

Started in 1975 basis OPC recommendations

Modified in 1984 basis OCRC recommendations

Phased dismantling of APM

Commenced in 1998APM for refineries and indl. products dismantled in 1998

Marketing of ATF deregulated in April 2001

Full dismantling effective April 2002

Evolution of Pricing

Pricing under APM

Consumer prices fixed by the Govt.

Assured reimbursement of costs to

OMCs

Assured 12% post tax return returns

on investment

Phased Deregulation of APM

Phased deregulation of Marketing

activities Lubes - November 1993

Bitumen – August 1997

FO, LSHS, Naphtha, etc. - April 1998

ATF - April 2001

MS, HSD, SKO & LPG – April 2002

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

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Pricing

Import Parity Price (IPP) :

IPP at smaller ports linked to nearest Port Refineries based on coastal freight

IPP for Inland refineries based on Inland freight differential from nearest primary port

Inland freight differential is 75% of the railway freight between nearest primary port and inland refinery

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Import Parity Pricing (IPP)

Refinery Transfer Prices (RTP) based on IPP for :

Jamnagar

Mangalore

Mumbai

Kochi

Chennai

Visakh

Haldia

Refinery Ports Non Refinery Ports

Paradeep

Kandla

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Refinery Transfer Prices (RTP)

RTPs of ATF, SKO & LPG fixed monthly RTPs of other major products fixed on

fortnightly basis

RTP based on IPP is worked out considering Product FOB Ocean Freight – Middle East to port location Customs Duty Insurance, Ocean Loss, Port Wharfage Etc.

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Pricing

Prices for Sale to Customers :

Pricing of MS, HSD, SKO & LPG being continued on APM structure with:

Uniform ex-storage selling price for all refineries including inland refineries

Depot prices worked based on

NRF from nearest refinery

Shrinkage allowances and local levies

State surcharge

Excise duty

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Pricing

Retail Selling Price (RSP):

Retail selling prices at retail outlets are worked out basis:

Price at nearest depot

Road Delivery charges

Sales Tax

Dealer commission

Local levies &

Shrinkage allowance for hilly areas

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Product Exchange at Depots

Product exchange prices for Inland depots linked

to Refinery/ non refinery ports based on the

cheapest mode of transport available e.g.:

Pipeline freight for P/L TOPs equal to 75% of rail freight for MS & HSD 90% of rail freight for SKO

Actual Rail/ Road freight for other inland

locations Terminalling charges- basically charges for

storage & distribution facilities. Rates varies

with mode of delivery & product

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Free Trade Products

Free Trade Products - Competitive Pricing-Price changes every fortnight basis International Crude prices-Price charged to Customer is called PRA since sold Ex MI.-Eg: FO,LDO,Industrial SKO, ATF, LVFO, Naptha, Bitumen

Pricing Structure of Free Trade ProductBasic Price ex Refinery Point (BCSP) xxx NRF xxxSiding Shunting xxxState Surcharge xxxAssessable Value xxxExcise Duty xxxAdditional Excise Duty xxxEdu Cess xxxPRA xxxx

Controlled Products

-RSP fixed by Governement -Prices change periodically at the Government’s discretion -Price charged to the customer is called TSRA/CBR since sold as delivered. -Eg: MS, HSD, Domestic SKO, Domestic LPG Pricing Structure of Controlled Products MS/HSD

Basic Price ex Refinery Point xxx PRA xxxxx

NRF xxx Delivery Charges xxx

Siding Shunting xxx Shrinkage allowance xxx

RPO FACTOR xxx TSRA xxxx

PAF xxx Entry Tax xxx

Additive cost xxx Sales Tax/VAT xxx

Shrinkage Allowance xxx Additional Sales Tax xxx

State Surcharge xxx Surcharge on ST xxxAssessable Value xxxxx Dealer Commission

xxx

Excise Duty xxx VAT on Dealer Commission xxx

Additional Excise Duty xxx Final RSPxxxxx

Edu Cess xxx

FDZ Charges xxx

PRA xxxxx

LPG CATAGORIES FOR PRICING PURPOSE

LPG Bulk - Non Domestic LPG Domestic Pkd - 14.2 , 5 , 47.5 LPG ND Pkd – 19, 35, 47.5

Stages of Costing / Pricing

Port Level Pricing- ie Fixing IPP

Plant Level Pricing

Market Level Pricing

LPG COSTING- Import Parity Price

Ten coastal locations as pricing points. Monthly IPP IPP includes FOB, premium/ discount, freight, ocean

loss, insurance, LC charges, port charges/ wharfage etc.

For Inland location, IPP of nearest port plus 75% rail frt.

Price as per IPP basis is used for settlement with OMCs and Fractionators. It is called RTP.

Terminalling Charges – not part of IPP/RTP and is settled separately.

FOB Prices

$/MT Butane Propane

Nov 08 490 490 Dec 08 335 340 Jan 09 380 380 Feb 09 505 505 March 09 450 470 April-09 405 395 May-09 400 380 June-09 455 395 July-09 540 500

PLANT LEVEL COST

Monthly IPP for Ten pricing port. Each plant attached to port for costing purpose.

Marketing cost ,Marketing margin Return on WC , stock loss Addl import cost for ND Actual transport cost from pricing port (rail/road/pipeline)

to plant Filling cost and Cyl. Compensation Terminalling charges –port specific Sub Total = Plantwise Cost Price

MARKET LEVEL COST

Plant Price State surcharge, PAF Pkd TPT cost Octroi, toll tax CBR DC , VAT RSP

ND BULK LPG

Price developed for ten port plus four Inland refineries

IPP includes Customs duty 5.15% Marketing margin, cost, import cost,

Terminalling charges ( Rs 5000/MT app) Ex-storage price is advised. State surcharge of receiving state Excise Duty 8.24% (AV / TV) Discount if any Sales Tax as applicable

LPG PRICING FOR ND PKD

NON DOM. PKD LPG Cost price concept No subsidy for ND PKD Pricing uniformity with OMCs

maintained Cost price for each plant is

different.

NON-DOMESTIC PKD LPG – Actual PBU

Import parity Price (with 5.15% CD,cess) Marketing margin, cost, CVR , Filling

cost, import cost, Terminalling charges Freight Actual from port to plant - Rail/

Road/ P/L State surcharge, Bulk Octroi- if any, Plantwise cost Price Excise Duty- 8.24% Packed Frt ( Rs 15/18/21 per cyl) CBR Sales Tax , Dealer commission, Vat on

DC RSP

Pricing / Loss on Domestic LPG

Though Govt. deregulated the prices of all petroleum products, including domestic LPG eff. April 1, 2002, the prices of domestic LPG was frozen at the levels

prevailing on 17-3-02. In June 04 and Nov 04 increase of Rs. 20/- each was approved. Eff 5.7.08, there was hike of Rs 50/- per cyl. Eff 29.1.09, there was reduction of Rs 25/-cyl

Thus though the cost is increasing , there is minor change in selling price

DOMESTIC LPG – Actual PBU

Ex- storage point price - Rs 17996.50/MT Bulk NRF ie. Frozen NRF as of 15.4.85 plus incre.

94-95, 97-99 Price Adj. Factor (ED / ST) (state specific) = Issue Price (Plant specific) State surcharge (state specific) Bulk / Packed Octroi - if any Packed Frt ( Rs 10/12/14 per cyl) CBR Sales Tax , Dealer commission Rs 21.94cyl eff

1.7.09, Vat on DC RSP

DOMESTIC LPG – Subsidy/ loss claim

Plantwise Cost price – issue price = Gross Loss

Ie (IPP+Bulk Frt+TC+Margin+FC+Cyl comp) -(BCSP+NRF+PAF)

Partially compensated thru subsidy, balance thru loss sharing by ONGC/ GAIL and by Oil Bonds or by OMCs

No subsidy for cost beyond plant level, CST u/r, diff linkages.

DOMESTIC LPG – U/R not covered by subsidy / Loss scheme

RTP paid to act. source vs. RTP/IPP of pricing port for the plant

Bulk TPT from actual source to plant vs. Bulk TPT from pricing port to plant.

Actual Pkd TPT cost for market vs. As per PBU.

CST U/R when pricing (APM) is on within state basis while supply is on interstate basis.

U/R on Actual imports which is 100% Butane at current CP rate whereas RTP based on previous month CP rate with 60:40 mix.

Toll Tax

NON-DOMESTIC PKD LPG – Some issues

Inland Refineries (IOC) demanding 100% Rail frt for ND use instead of current 75%

Fractionators / Inland refineries demanding CST reimbursement on ND LPG which is not paid currently.

Imported LPG can not be used for ND purpose.

ED paid on AV for own souring and paid on TV from OMC procurement whereas in PBU it is on AV.

Other issues similarly as applicable for domestic LPG

Domestic Packed LPG

Basic Price xxxState Surcharge xxxNRF xxxAssessable Value xxxxxExcise Duty xxxPAP xxxxxLocal Delivery Charges xxxCBR xxxxxSales Tax/VAT xxxAdditional Sales Tax xxxDealer Commision xxxVAT on Dealer Commision xxxFinal RSP xxxx

PRICE BUILDUP FOR DELHI MARKET FOR INTER STATE SUPPLY

 SUPPLY POINT IS

WITHIN STATESUPPLY POINT IS

INTER STATE

EX STORAGE POINT PRICE 16303.50 16303.50

BULK NRF FROM SOURCE TO PLANT (DOM NRF SAME AS APM) 99.70 99.70

STATE SPECIFIC COST 2.00 2.00

PRICE ADJUSTMENT FACTOR (PAF) 1509.00 1509.00

ISSUE PRICE FOR THE PLANT (Rs./MT) 17914.20 17914.20

EXCISE DUTY ON ABOVE NIL 0.00 0.00

PRICE AT PRICING POINT (Rs./Cyl) 254.38 254.38

PACKED FREIGHT 10.00 10.00

PRICING UNDER OVER RECOVERY 0.00 -7.72

COMPANY BILLING RATE 264.38 256.66

CENTRAL SALES TAX 3 % OR FIRST POINT TAX 4% 10.58 7.70

SUB TOTAL 2 274.96 264.36

DEALER COMMSSION 19.05 19.05

VAT ON DEALER COMMISSION 4% 0.76

SUB TOTAL 3 294.77 283.41

LAST POINT TAX 4% 0.00 11.34

RETAIL SELLING PRICE 294.75 294.75

POL Pricing

♦ MS/HSD

Pricing is solely dependent on Town code irrespective of the source of supply if supplies are within state.

Supplies are only on Delivered basis.

♦ SKO/LDO/FO/Naphtha Pricing is on the supply location - Ex.MI.

Supplies are Delivered & EXMI only.

Discounts/Delivery charges are linked to supply points.

State surcharge in case of Ex.MI will be that of the state of supply plant.

THANK YOU