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Pricing reforms for the Petroleum Sector 26 th July 2006 Industries Limited RIL’s Existing...

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Pricing reforms for the Petroleum Sector 26 th July 2006 Industries Limited RIL’s Existing Refinery At Jamnagar, Gujarat
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Presentation TitleRIL’s Existing Refinery At Jamnagar, Gujarat
Pricing reforms for the Petroleum Sector
26th July 2006
Market Determined Pricing for MS & HSD
Subsidy only for LPG & SKO
Transparent subsidies
GoI control on the Prices
Subsidy on MS & HSD in additional to SKO & LPG
Complex and opaque subsidies
GoI Policy
Ground Realities
?
Private Companies are left with an Under Recovery of Rs 3.39 / Litre on MS and Rs 5.77 / Litre on HSD
Sheet3
1189
5248
6437
Rs Crores
57679
3000
141.67
141.67
141.67
141.67
141.67
141.67
141.67
141.67
141.67
141.67
141.67
387.24
387.24
387.24
387.24
387.24
387.24
387.24
387.24
387.24
387.24
387.24
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
112.90
112.90
112.90
112.90
112.90
112.90
112.90
112.90
112.90
112.90
112.90
309.05
309.05
309.05
309.05
309.05
309.05
309.05
309.05
309.05
309.05
309.05
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
372.86
372.86
372.86
372.86
372.86
372.86
372.86
372.86
372.86
372.86
372.86
310.04
310.04
310.04
310.04
310.04
310.04
310.04
310.04
310.04
310.04
310.04
537.38
537.38
537.38
537.38
537.38
537.38
537.38
537.38
537.38
537.38
537.38
1534.67
1534.67
1534.67
1534.67
1534.67
1534.67
1534.67
1534.67
1534.67
1534.67
1534.67
MS HSD
46.69
35.68
60.86
50.94
46.96
35.68
61.04
50.94
47.14
35.68
60.88
50.94
47.38
35.68
60.69
50.94
47.68
35.68
60.47
50.94
47.68
35.68
60.47
50.94
48.27
35.68
60.54
50.94
48.27
35.68
60.54
50.94
48.27
35.68
60.54
50.94
29.95
9.24
501.505672361
298.6381366535
30.86
9.24
576.7697029096
298.6381366535
31.22
9.24
574.4910613546
298.6381366535
31.54
9.24
571.8034328538
298.6381366535
31.85
9.24
568.7360307606
298.6381366535
31.85
9.24
568.7360307606
298.6381366535
32.46
9.24
569.6416447119
298.6381366535
32.46
9.24
569.6416447119
298.6381366535
32.46
9.24
569.6416447119
298.6381366535
31.63
9.24
563.4407627929
298.6381366535
20.60%
20.60%
20.60%
20.60%
20.60%
20.60%
20.60%
20.60%
20.60%
20.60%
20.60%
26.16%
26.16%
26.16%
26.16%
26.16%
26.16%
26.16%
26.16%
26.16%
26.16%
26.16%
Retail Selling Prices
53164
21406
Current
Suggested
20.60%
20.60%
26.16%
26.16%
53164
15125
* Estimated Revenue in 04/05 , a normal year was Rs.31196 Crs on MS & HSD for States
Current
Suggested
20.60%
12.00%
26.16%
20.00%
Co-existence of taxes and non-transparent subsidies – Lowering of taxes or, alternatively issue of oil bonds to all players in proportion to domestic sales.
Sheet3
Sales Details
141.67
141.67
141.67
141.67
141.67
141.67
141.67
141.67
141.67
141.67
141.67
387.24
387.24
387.24
387.24
387.24
387.24
387.24
387.24
387.24
387.24
387.24
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
112.90
112.90
112.90
112.90
112.90
112.90
112.90
112.90
112.90
112.90
112.90
309.05
309.05
309.05
309.05
309.05
309.05
309.05
309.05
309.05
309.05
309.05
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
372.86
372.86
372.86
372.86
372.86
372.86
372.86
372.86
372.86
372.86
372.86
310.04
310.04
310.04
310.04
310.04
310.04
310.04
310.04
310.04
310.04
310.04
537.38
537.38
537.38
537.38
537.38
537.38
537.38
537.38
537.38
537.38
537.38
1534.67
1534.67
1534.67
1534.67
1534.67
1534.67
1534.67
1534.67
1534.67
1534.67
1534.67
Slide 2 MS HSD
46.69
35.68
60.86
50.94
46.96
35.68
61.04
50.94
47.14
35.68
60.88
50.94
47.38
35.68
60.69
50.94
47.68
35.68
60.47
50.94
47.68
35.68
60.47
50.94
48.27
35.68
60.54
50.94
48.27
35.68
60.54
50.94
48.27
35.68
60.54
50.94
29.95
9.24
501.505672361
298.6381366535
30.86
9.24
576.7697029096
298.6381366535
31.22
9.24
574.4910613546
298.6381366535
31.54
9.24
571.8034328538
298.6381366535
31.85
9.24
568.7360307606
298.6381366535
31.85
9.24
568.7360307606
298.6381366535
32.46
9.24
569.6416447119
298.6381366535
32.46
9.24
569.6416447119
298.6381366535
32.46
9.24
569.6416447119
298.6381366535
31.63
9.24
563.4407627929
298.6381366535
20.60%
20.60%
20.60%
20.60%
20.60%
20.60%
20.60%
20.60%
20.60%
20.60%
20.60%
26.16%
26.16%
26.16%
26.16%
26.16%
26.16%
26.16%
26.16%
26.16%
26.16%
26.16%
Retail Selling Prices
53164
38659
14505
# Figures based on assumed implementation of suggestion from 1st Aug'06
Current
Suggested
MS
HSD
MS
HSD
20.92%
20.60%
20.60%
26.56%
26.16%
26.16%
53164
42887
10277
* Estimated Revenue in 04/05 , a normal year was Rs.31196 Crs on MS & HSD for States.
At suggested rates, the states get a better revenue.
# Figures based on assumed implementation of suggestion from 1st Aug'06
Current
Suggested
MS
HSD
MS
HSD
2,000
8,277
20.92%
20.60%
12.00%
26.56%
26.16%
20.00%
5876.38
6171.47
3768.20
9847.96
10601.70
8347.59
7.83
37.62
Uniform Sales Tax / VAT in States eliminates cross border distortions
Sales Details
141.67
141.67
141.67
141.67
141.67
141.67
141.67
141.67
141.67
141.67
141.67
387.24
387.24
387.24
387.24
387.24
387.24
387.24
387.24
387.24
387.24
387.24
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
112.90
112.90
112.90
112.90
112.90
112.90
112.90
112.90
112.90
112.90
112.90
309.05
309.05
309.05
309.05
309.05
309.05
309.05
309.05
309.05
309.05
309.05
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
40.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
372.86
372.86
372.86
372.86
372.86
372.86
372.86
372.86
372.86
372.86
372.86
310.04
310.04
310.04
310.04
310.04
310.04
310.04
310.04
310.04
310.04
310.04
537.38
537.38
537.38
537.38
537.38
537.38
537.38
537.38
537.38
537.38
537.38
1534.67
1534.67
1534.67
1534.67
1534.67
1534.67
1534.67
1534.67
1534.67
1534.67
1534.67
Slide 2 MS HSD
46.69
35.68
60.86
50.94
46.96
35.68
61.04
50.94
47.14
35.68
60.88
50.94
47.38
35.68
60.69
50.94
47.68
35.68
60.47
50.94
47.68
35.68
60.47
50.94
48.27
35.68
60.54
50.94
48.27
35.68
60.54
50.94
48.27
35.68
60.54
50.94
29.95
9.24
501.505672361
298.6381366535
30.86
9.24
576.7697029096
298.6381366535
31.22
9.24
574.4910613546
298.6381366535
31.54
9.24
571.8034328538
298.6381366535
31.85
9.24
568.7360307606
298.6381366535
31.85
9.24
568.7360307606
298.6381366535
32.46
9.24
569.6416447119
298.6381366535
32.46
9.24
569.6416447119
298.6381366535
32.46
9.24
569.6416447119
298.6381366535
31.63
9.24
563.4407627929
298.6381366535
20.60%
20.60%
20.60%
20.60%
20.60%
20.60%
20.60%
20.60%
20.60%
20.60%
20.60%
26.16%
26.16%
26.16%
26.16%
26.16%
26.16%
26.16%
26.16%
26.16%
26.16%
26.16%
Retail Selling Prices
53164
38659
14505
# Figures based on assumed implementation of suggestion from 1st Aug'06
Current
Suggested
MS
HSD
MS
HSD
20.92%
20.60%
20.60%
26.56%
26.16%
26.16%
53164
42887
10277
Current
Suggested
MS
HSD
MS
HSD
2,000
8,277
20.92%
20.60%
12.00%
26.56%
26.16%
20.00%
5876.38
6171.47
3768.20
9847.96
10601.70
8347.59
7.83
37.62
To Conclude….For Oil Industry to Survive
Energy is critical and needs critical corrective steps for a sustainable future
For a robust Oil Industry avoid opaque and partisan subsidies by:
Reducing Excise Duty on MS and HSD
Levying Specific duty on MS and HSD
Reducing the Sales Tax levels
Introducing uniform levels of sales tax/VAT on petroleum products in all states
Q&A
Thank You
Market Share dropped to <2% from 15%
Company Investment of 4000 Crores and Dealer Investment between 1.5 - 2 Crores per RO : Idling
Transporter (3745 Trucks) Investment of Rs 524 Crores Idling
55,000 Jobs at Risk
Competition will die
Consumer expectation on world class Q & Q will die a premature death
Continue Marketing & Continue Absorbing Losses
Reduce Volume Increase Prices
OR
RSP was increased to maintain a differential of Rs 2.50 per Litre in both MS and HSD
Till June'06Balance
HSD
SKO (BPL)
LPG
TOTAL
Savings in Under Recoveries (Rs. Crs)
* Including Road Cess on MS HSD
# Figures based on assumed implementation of suggestion from 1st Aug'06
14505
53164
CurrentSuggested #
4604331538
14505
38659
Product
Savings in Under Recoveries (Rs. Crs)
CurrentSuggested #
4594034825
11116
42887
10277
53164
MSHSDSKOLPGTOTAL
83903794019403777973512
310762899396
118952486437
40942640319403777957679
TKL/
TMT
120784573411926984479581
Total Coverage
PDS SK Limited to BPL with increased allocation
Oil Bonds

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