Even after the fresh reduction, there exists a scope for cutting rates by a further Re1 per litre as current revision was done at average international oil rate in the first fortnight of June
New Delhi: In a relief to inflation-battered common man, petrol price was cut by Rs2.46 per litre on Thursday, the second reduction this month, reports PTI.
Petrol price in Delhi will cost Rs67.78 per litre with effect from midnight Thursday as compared to Rs70.24 a litre rate now, state-owned oil companies announced.
The reduction in rates follows a Rs2.02 a litre cut in prices from 3rd June. The two price cuts have wiped out more than half of the massive Rs7.54 per litre increase in rates, the biggest in the history which was effected last month.
Even after the fresh reduction, there exists a scope for cutting rates by a further Re1 per litre as current revision was done at average international oil rate in the first fortnight of June. Global oil prices have fallen by 8% since then.
In Mumbai, petrol price has been cut by Rs3.10 to Rs73.35 per litre, while it will cost Rs72.74 a litre in Kolkata from Friday compared to Rs75.81 per litre currently. Chennai saw a Rs3.07 per litre cut in price to Rs72.74 a litre.
State-owned oil firms abandoned the practice of revising rates of petrol on 1st and 16th of every month and from now on will now do so on a random date so as to deter petrol pump dealers building positions.
Petrol pumps at some places run dry as owners stop taking supplies from companies if a reduction in price is anticipated. Similarly, if an increase in rate is expected, pump dealers start hoarding supplies.
Indian Oil Corporation (IOC), the nation's largest fuel retailer, said the three oil firms are projected to lose a record Rs1,51,000 crore in revenue on sale of diesel, domestic LPG and kerosene, whose rates have not been revised in past one year.
Oil firms, IOC said, continue to closely monitor the international oil prices and the evolving scenario in rupee-dollar exchange rates to assess their potential impact on selling prices in future.
"It may be noted that prevailing global economic conditions have had an adverse impact on world petrol demand resulting in petrol margins over crude oil prices dipping to unsustainable lows. Therefore, price differential of crude and petrol shall also be under a close watch in the coming days," it said.
Sources said the gasoline cracks or the difference between cost of raw material (crude oil) and the price of product (petrol) had narrowed to just $3 per barrel. In comparison, cracks for diesel were as high as $12-$13 a barrel.
With such narrow spread, any upward movement in crude oil price or devaluation of rupee would force an increase in price in near future, if the rates were to be cut now.
The action by the apex bank should serve as a pointer to other banks—big and small—that charge excessive service charges
The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs2 lakh on the Bundi Urban Co-operative Bank located at Bundi in Rajasthan. According to a press release, the bank has been penalised for "repeated violations of Reserve Bank of India (RBI) directives relating to donation and levy of service charges on customers". A show-cause notice was sent to the bank, but the central bank found the response unsatisfactory.
Levying monetary penalty for violation of RBI guidelines on services charges to customers is the first of its kind by the RBI. The action by the apex bank should serve as a pointer to other banks-big and small-that charge excessive service charges.
Reliance Industries’ failure to disclose material information about the steep 80% fall in the reserves of its KG-D6 block has led to questions about its corporate governance Among the independent directors are management guru Dipak C Jain and scientist RA Mashelkar
Reliance investors were startled a few days ago at media reports that its gas reserves at the KG-D6 block were 80% lower than claimed. Niko Resources of Canada, Reliance Industries' joint venture partner in the KG-D6 block came out with a shocking assessment on the KG-D6 block, which was released through PTI. It said, "Reliance Industries' flagging KG-D6 gas block holds 80% less reserves than previously estimated." It further said, "Proved plus probable reserves at Krishna Godavari basin D6 block has decreased to 1.93 trillion cubic feet (tcf) from about 9.65 Tcf previous estimates". This material information should have been disclosed to investors at first moment's notice.
While the news made waves in the market, the regulators remained silent. However EAS Sarma, former expenditure secretary, Government of India has written to U K Sinha, chairman of the Securities & Exchange Board of India (SEBI) and the secretary, Department of Economic Affairs asking them to examine the report. Mr Sarma has said that "this is an important bit of information" ought to have been promptly disclosed to investors. Also, that the capital investments reported in relation to the approved production schedules, as disclosed to the government, seem to go counter to this".
Mr Sarma has correctly requested SEBI to examine the following issues:
What action should SEBI take if the report is correct?
Incidentally, this is not the first time that Moneylife has written about Reliance's patchy disclosures Recently, we had written about its Annual General Meeting, where it did not disclose information on some of its biggest projects. About the KG-D6 project, chairman Mukesh Ambani said, "We are well on the way to creating a pipeline of projects for our next wave of oil and gas development projects which would include R series discoveries and all the satellite discoveries. Subject to receiving the requisite approvals, we hope to add around 30 (million metric standard cubic metres per day (mmscmd) of additional production through the new wave of planned developments," whatever this means.
Earlier, RIL had in 2006 stated that output would rise to 80 mmscmd by 2012-13. It also said it would invest $5.2 billion to double the output to achieve the target. After making these rosy predictions, its share price went up from Rs1,264 to a high of Rs1608. However, natural gas output at KG-D6 fields has dipped to 31.33 million metric standard cubic meters per day (mmscmd) this month after hitting a peak of 61.5 mmscmd in June 2010. It hardly touched 80 mmscmd. After that it has dropped by nearly 55% to Rs719. Was Reliance playing around with the numbers and by having wildly optimistic view of the future?
Niko said the field performance at the D1/D3 fields during 2011 demonstrated "higher than expected pressure draw-downs". Further, "An assessment of reservoir performance concluded that, contrary to the previous geological model, the current D1/D3 producing wells did not appear to be receiving any contribution from outside the main channel areas," Niko said in the PTI release. Niko is known to be conservative in its assessments.
Niko holds 10% stake in KG-DWN-98/3 (or KG-D6 block) where RIL is the operator with 60% interest. The remaining 30% is held by British Petroleum PLC of UK. The 7,645 sq km KG-D6 Block has 19 oil and gas discoveries. Of these, production from the MA oil find began in September 2008 and from the Dhirubhai 1 and 3 gas discoveries in April 2009.