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Why Indian government exports petrol at half the price we pay

A news report actively shared on social media based on RTI reply on exports claims that India is exporting refined petrol to 15 nations at Rs 34 per litre while refined diesel is exported to 29 countries at Rs 37 per litre as per the information provided.

It is being alleged that Government has levied high taxes on petroleum products making it a prized commodity for domestic consumers while the same is exported at a much cheaper cost.

As per the RTI reply from Govt owned Mangalore Refinery and Petrochemicals Limited, between January 1, 2018 to June 30, 2018, it exported refined petroleum products (Petrol/Diesel) to five countries-Hong Kong, Malaysia, Mauritius, Singapore and UAE.

The export price of petrol varied between Rs 32 to 34 per liter, diesel was exported Rs 34 to 36 per liter depending on the destination. While the price of petrol during this period hovered between Rs 69.97 to Rs 75.55 per liter and diesel was Rs 59.70 to 67.38 per liter.

India Today brings to you a fact file on petroleum products price for domestic use and exports:

1. India is one of largest importers of crude oil but it is also one of the largest exporters of refined oil given the presence of refineries to take advantage of country’s location between crude oil producing nations in the Middle East and its consumers in the rest of Asia.

2. Refined Petroleum is the among the top two exports of India. Our country is the 10th largest exporter of refined petroleum in the world. India exports refined petroleum to the USA, UK, Australia as well as oil-producing countries like Iraq and UAE. During 2017, India exported refined oil worth $24.1 billion. Its share in the world market stood at 3.9%.

3. Price of refined oil is more or less same whether for export of domestic consumption. Experts say for this could be higher for refined oil meant for US & Europe markets given their high standards of quality which increases the refining cost.

4. Export price of the refined oil is determined by global supply/demand. Oil Marketing Companies can’t do much about it since its highly competitive.

5. The price of domestic refined oil is higher than the export price largely due to more than 100% tax rate by the Center and the States

6. As per the information provided by Indian Oil Corporation, crude Petrol cost of Indian companies (20th August) was Rs 35.90 per liter while crude diesel came at Rs 38.25 per litre.

7. The price of refined petrol charged by Indian Oil to dealers was Rs 37.93 per liter while refined diesel charged to dealers was Rs 41.04 per litre.

8. The refined petrol/diesel price charged to diesel without taxes is very close to the export price of refined oil.

9. The Retail Selling Price of Petrol at Delhi (Rounded) is Rs 77.49 (20th August). This includes Excise Duty Rs 19.48 /liter, Dealer Commission (Average) Rs 3.61 /liter and VAT (including VAT on Dealer Commission) is Rs 16.47 /liter.

10. For diesel, the Retail Selling Price at Delhi (Rounded) is Rs 69.04/litre (20th August). This includes Excise Duty Rs 15.33 /litre, Dealer Commission (Average) Rs 2.51 /litre and VAT (including VAT on Dealer Commission) is Rs 10.16/litre

The RTI reply revelation may shock you for a while but its a fact that the price of refined oil for domestic markets and export is more or less the same, its the taxation on refined oil for domestic consumers which makes petrol/diesel costly for the domestic consumers.