Today's Diesel Price in Andhra Pradesh

Mechanism used to Determine Diesel Prices in Andhra Pradesh

The daily revision is the mechanism used to determine the price of diesel in all parts of Andhra Pradesh currently. India joins Australia and the United States of America (USA) wherein fuel rates are revised on a daily basis. The daily revision is also called dynamic fuel pricing. India introduced the new system in June 2017 in order to bring transparency in fuel pricing. Under the new pricing system, all diesel bunks in the state whether automated or non-automated will revise diesel rates every day. Fuel pricing is automatically done in automated bunks. In non-automated bunks, it is manually done. Dynamic Fuel Pricing method considers the daily fluctuations in worldwide crude oil rates and the exchange rate. As we know, the exchange rate and crude oil prices fluctuate recurrently. Therefore, any variations in these two determinants can be easily transmitted to end consumers. This is the biggest advantage of dynamic fuel pricing. Dealers will be able to deploy the best inventory management practices.

How to Trace the Current Rate of Diesel in Andhra Pradesh?

The current diesel rate in the state can be traced through the following ways:

Consumers can send a text message in the prescribed format.

Consumers can dial the customer care number of oil marketing companies.

The current rate can also be checked online.

Note: All the three state-owned oil marketing companies will offer the aforementioned services.

Process of Computing Diesel Prices in Andhra Pradesh

• Computation of Cost of Crude Oil: Crude oil is the primary raw material. It is also called unrefined oil. The following formula is used to compute the cost of crude oil:

• Cost of crude oil = exchange rate X cost of crude oil per barrel: Let's assume that the cost of cost crude oil per barrel is $50 and the value of the USD against the INR is Rs.60. Then the cost of crude oil will be Rs.3,000. To compute the cost of crude oil per litre, the cost of crude oil is divided by 159.

• Refinery Transfer Price: The refinery transfer price (RTP) is the price charged by refineries to convert unrefined oil into diesel. RTP is incurred by oil marketing companies.

• State Levies and the Central Tax: State levies and the central tax account for more 50% of the retail selling price (RTP) of diesel in Andhra Pradesh. As per the data released by Petroleum Planning and Analysis Cell, the state VAT imposed on diesel in Andhra Pradesh was Rs.30.86% and the central excise duty was Rs.17.33 per litre.

• Other Expenses: Other expenses include the profit margin of oil marketing companies(IOCL, BPCL, HPCL), the commission charged dealers, transportation expenses, pollutions cess and customs duty. The retail selling price (RTP) of diesel per litre comprises of all the aforementioned cost elements. 

Factors Impacting Diesel Prices in Andhra Pradesh 

Diesel Rates in the state are impacted by the following aspects: 

• Exchange Rate: Being a global commodity, crude oil is traded in the USD, which is the base currency. The cost of crude oil decreases if the base currency depreciates against the INR, which is the local currency. If the base currency appreciates against the INR, the cost price of unrefined oil will increase. Any variations in the cost price of crude oil will ultimately impact the retail selling price of diesel. 

• Cost of Crude Oil: There are several factors that impact the cost of crude oil. The most common influencers include seasonal fluctuations, weather conditions, the demand for crude oil in overseas markets and political moves in oil-producing economies. The variations in the cost price of unrefined oil will directly impact the final selling price of diesel. 

• The Central Tax and State Levies: The state VAT imposed on diesel by the government of Andhra Pradesh is comparatively high. Therefore, the cost of diesel per litre in the state is high. The central excise duty also affects the final selling price of diesel. 

How does GST Impact Diesel Prices in Andhra Pradesh?

The Goods and Services Tax (GST) is a common tax structure for Indian taxpayers. It is levied on all categories of goods and services, which are sold within the country. Diesel has been kept outside the regime of GST.Thus, diesel rates will remain unaffected by GST. If GST is imposed on diesel, diesel rates will be lowered by 20-30%. It may not be a feasible move from the viewpoint of the state and central governments.