Companies & Sectors
Oil companies stop producing premium petrol, diesel

Branded diesel price saw a 43% jump in price to Rs65.81 while the prices of premium petrol went up by 9% to an average of Rs77.58 a litre in Delhi after the government asked premium fuels to be priced at cost

New Delhi: State-owned oil companies have virtually stopped producing premium or branded petrol and diesel as sales have plunged due to huge differential in rates when compared with non-branded or ordinary fuel, reports PTI.
The government last month cut excise duty on non-branded petrol by Rs5.50 to Rs9.28 per litre. It did not cut the Rs15.96 a litre excise duty on branded petrol, and ordered the premium petrol and diesel be priced at cost.
This meant that price of branded petrol and diesel when up steeply. Branded diesel price saw a 43% jump in price to Rs65.81 while the prices of premium petrol went up by 9% to an average of Rs77.58 a litre in Delhi.
Regular unbranded petrol and diesel, heavily subsidised by the government, sell at Rs67.90 and Rs46.95 a litre respectively in New Delhi.
"Sales are almost nil zero," Indian Oil Corp's Director Marketing Makrand Nene said at the Petrotech 2012 Conference here. "There are no buyers (of premium diesel or petrol) at these prices."
An executive of Hindustan Petroleum Corp (BPCL) said the stocks that were lying before the 15th September price hike haven't exhausted yet and oil companies would supply branded fuel to petrol pumps only if there is a demand.
"We are rationalising the infrastructure," Nene said.
"We will produce branded fuels only if there is demand from dealers."
IOC sells premium fuels under XtraMile brand, while Bharat Petroleum Corp and HPCL market the Speed and Power brands, respectively. Premium fuels contain additives that are aimed at improving engine performance and reducing emissions.
"In 2007-08, the price differential between branded fuel and non-branded ordinary fuels was just 60 paise a litre, branded fuels used to contribute 20-30% of our petrol and diesel volume sales," said a senior official at BPCL.
Sale of branded fuels started to fall since 2009, after the government hiked excise duty on these products.
Branded fuels, which contain imported additives helps in improving engine life and reduce pollution levels, were introduced in 2002.
The reduced sales may eat into earnings at the three state-owned fuel retailers - Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp -- as they enjoy higher margins on the premium products.
Fuel retailers have spent crores of rupees in advertising campaigns to popularise branded fuels which they claimed added value in the form of superior mileage, lower maintenance costs, improved engine protection and smaller carbon footprints.
Petrol pump owners want to convert the tanks used for storing branded fuel to those for regular fuel.


Inflation rises to 7.8% as wheat, diesel prices soar

Inflation in diesel shot up to 8.9% during the month, from 0.36%, following a price rise of over Rs5 per litre on 13th September, while wheat and cereals turned expensive by 18.6% and 14.2%, respectively

New Delhi: Inflation in India rose to its highest level this fiscal at 7.81% in September as prices of wheat, cereals and diesel soared, a development that may restrain Reserve Bank of India (RBI) from cutting interest rates at its monetary policy later this month, reports PTI.
Inflation, as measured by the Wholesale Price Index (WPI), was 7.55% in August. In September last year, however, it was 10%.
In the food articles category, wheat turned expensive by 18.6%, up from 12.9% in August. Cereals too became dearer by 14.2%, from 10.7% in the previous month.
Inflation in diesel shot up to 8.9% during the month, from 0.36%, following government raising prices of the petro-product by over Rs5 per litre on 13th September.
For the fuel and power category, inflation surged 11.88% from 8.32%. Besides diesel, aviation turbine fuel and kerosene became expensive.
Food inflation, as a category, declined to 7.86% during the month, from 9.14% in the previous month.
Food articles have 14.3% share in the WPI basket. Year-on-year basis, however, potatoes were costlier by 52.20% and rice by 12.41%.
In the manufactured items category, prices rose for cotton textiles, paper and paper products, rubber and plastic products.
The rate of price rise in the manufactured products was 6.26% in September, as against 6.14% in August.
The Reserve Bank is scheduled to unveil its policy on October 30. Industry has been demanding a rate cut in view of fiscal measures taken by the government, but the high level of inflation may dissuade RBI from easing the policy
Inflation in eggs, meat and fish prices was 12.44%, while in milk and fruits it was 6.25% and 6.96% respectively.
However, vegetables prices have eased to (-)6.78% in September on year-on-year basis. Inflation in this segment was 9.98% in August.
However, the pressure on prices of onions declined during the month to (-) 24.88%.
In non-food articles, inflation in oil seeds was 28.13%, fibres (-) 5.67% and minerals 12.38%.
Inflation for July was revised upwards to 7.52%, from 6.87% as per provisional estimates.
Before the September inflation number, as per the data released on Monday, June had the highest rate of price rise in this fiscal at 7.58%.


Supreme Court refuses to stay FDI policy in retail, asks RBI to amend FEMA

While refusing to stay the decision to allow FDI in retail, the apex court asked RBI to amend the FEMA regulations to allow implementation of the policy

New Delhi: The Supreme Court on Monday refused to stay the Centre's decision to allow foreign direct investment (FDI) in retail sector, reports PTI.
A bench of justices RM Lodha and AR Dave, however, said that the policy suffers from 'curable' irregularity of want of legal sanction and asked the Reserve Bank of India (RBI) to amend the Foreign Exchange Management Act (FEMA) regulations to allow implementation of the government's policy.
The bench said the RBI should have amended the FEMA regulations before the implementation of FDI policy and asked the banking regulator to take steps to remove the lacunae in the way of giving a final shape to the policy.
The court observed that the regulations should have been amended before the Centre issued the notification, but clarified that the irregularity can now be cured with RBI amending FEMA regulation.
"At least it can be said that it is an irregularity that is curable and as soon as amendment is brought, it would be cured," the bench said.
During the argument, the court said the policy cannot be stayed just because of this irregularity.
Attorney General GE Vahanvati submitted that he would talk to the RBI Governor to take immediate steps for bringing amendment in the FEMA regulations.
The bench after hearing his submission adjourned the matter for further hearing on 5th November.
The court was hearing a public interest litigation (PIL) filed by lawyer ML Sharma, who has said that RBI's nod was missing from the Centre's policy allowing FDI in retail sector. 
The apex court on 5th October had sought the assistance of top law officers in hearing the PIL filed by Sharma against opening the multi-brand retail sector to the FDI saying there was a need for clarification since some link is missing pertaining to the RBI regulation on the issue.
Sharma has said in his petition that that retail trading is strictly prohibited under the law of FEMA under which the power to come out with a circular is vested with the RBI which has not issued any regulation after 2008.
He has alleged in his PIL that the Centre's notification was issued without the authority of law as approval of neither the President nor the Parliament was secured.
The apex court had, however, rejected the allegation saying "this assumption that the policy has to be in the name of the President is flawed and unfounded." 
"The Constitution does not provide that the policy should be in the name of the President." 
It further said a policy is never required to be placed before Parliament.
The apex court had also said that correctness of the policy has to be challenged on the touch stone of the circular whether it is ultra vires of the law or not.




5 years ago

Will someone clarify:
• Even if it was an ‘omission’, does it not sound a little odd to ask/order RBI to initiate an amendment to FEMA to regularize an executive order which could have been issued after due diligence? was RBI consulted?
• The position that a ‘policy’ need not be in the name of the President or need not be placed before parliament is a legalistic view and coming from the Apex court, must be the right view. But enforcing measures which need legislative sanction through executive order and then going to parliament for passing Bills to regularize them where there was no ‘emergent’ situation warranting such action getting the tacit approval sends disturbing signals. In the absence of necessary numbers in both the houses, this method is being resorted to more often. Should not this tendency be discouraged?

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