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Branded petrol, diesel set to turn cheaper

Premium fuels including petrol and diesel, which can increase the efficiency (mileage) of your car by up to 2%, may soon turn affordable.

business Updated: Nov 27, 2013 01:20 IST
Anupama Airy

Premium fuels including petrol and diesel, which can increase the efficiency (mileage) of your car by up to 2%, may soon turn affordable.

The finance ministry is likely to slash duties on branded fuels, making premium petrol cheaper by Rs. 5 a litre and that of branded diesel by Rs. 2 a litre. These are typically used in high-end cars.

A litre of normal petrol costs about Rs. 71.05 a litre in Delhi while branded petrol is priced at Rs. 80. Normal diesel is priced at Rs. 53.10 a litre against Rs. 67.93 in case of branded diesel. Due to the difference in costs, these branded fuels are generally uneconomical for consumers. In fact, the sale of diesel at petrol pumps is negligible.

“Our request for rationalisation of the rate of excise duty on branded diesel and petrol is being looked into by the finance ministry and the two ministries are discussing how the price of these premium fuels can be made affordable for consumers,” a petroleum ministry official said.

While the finance ministry may not completely withdrawn the excise duty on premium fuels, indications are that excise duty will be cut by Rs. 5 a litre on petrol and Rs. 2 a litre on diesel, he added.

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Though a reduction in excise duties is unlikely to add to the exchequer’s revenues since currently branded fuel sales are meagre, it would help in energy conservation as these fuels provide improved engine performance, according to the petroleum ministry.

Against an excise duty of Rs. 1.20 a litre on normal petrol, branded petrol has a duty component as high as Rs. 7.50. Similarly, while normal diesel attracts an excise duty of Rs. 1.46 a litre, a duty of Rs. 3.75 duty is levied on branded diesel.

“While the reduction in excise duty on branded petrol may still draw customers to buy this premium fuel, the difference in normal and branded diesel even after duty reduction would continue to be high, thereby making the product uneconomical for consumers,” said Ajay Bansal, general secretary, All-India Petroleum Traders, an umbrella body of fuel banks in the country.