Not just petrol: taxes fuel diesel, gas prices

A large component of CNG and diesel prices is made up of taxes, commission etc; meanwhile, experts say government regulation takes the edge off diesel, LPG, kerosene prices for the common man

A day after MiD DAY dissected the plethora of heavy taxes that pump up petrol prices, we dwell on the pricing dynamics of other fuels like diesel and CNG, widely used for personal and commercial transport. While taxes inflate the prices for these fuels, experts say that government intervention in the form of subsidies for cooking gas, kerosene and diesel has restrained their prices from spinning out of control.

In Mumbai, CNG, widely used in public transportation like auto rickshaws, taxis and BEST bus fleet, costs Rs 32 per kg. Recently commuters had to bear with fare hikes by autos and taxis after prices of CNG shot up by Rs 6. But the actual cost of CNG is much less than the market price.

"There is a sales tax of 8 per cent levied on CNG," said AL Quadros, general secretary, Mumbai Taximen's Union.
This doesn't include the commission paid to agencies and oil marketing companies like Indian Oil Corporation, BPCL and HPCL that supply the gas to CNG pumps.

Dealers get around 80 paise as commission. Less than a month back, they had threatened to go on strike, demanding over a 100 per cent hike in commission. The government is yet to take a decision, but sources from Mahanagar Gas Ltd said that any hike in commission would force them to increase the cost of CNG.

The price of diesel, mainly used by heavy vehicles and buses, has remained constant for a while. "Though it sells at Rs 45 per litre, a major part of the cost is comprised of taxes. The excise duty and cess charges imposed by the state government make up around 22 per cent of the cost. The tax percentage varies from state to state," a diesel dealer said.

Apart from this, the dealer is given a commission of less than Re 1 per litre. Separate charges are paid to oil marketing companies once diesel is transferred after being imported. These add about 50 paise to the per litre cost of diesel. "Price of diesel is also dependent on the international market and the value of rupee against dollar. Recently, as the dollar has been climbing against the rupee, OMCs face an increase in the cost of procurement, which is likely to boost costs for consumers as well," the dealer added. 

Sources said that as far as diesel, LPG and kerosene are concerned, it is only because the government has regulated their selling price that the common man is not feeling the pinch at present.

The government has subsidised diesel by Rs 10.17 per litre, kerosene by Rs 25.66 per litre and LPG by Rs 260 per cylinder. These are the huge subsidies the government is giving to safeguard the larger interests of people.

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