Business Standard

Margin of refiners rises 76 per cent

Increase comes from import parity price

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Our Economy Bureau New Delhi
The increase in international petroleum prices has resulted in an average 76 per cent jump in the gross refining margin of refineries during July-September ,2004.
 
It rose to Rs 2,258.28 per million tonne from Rs 1,284.49 a year ago, Petroleum Minister Mani Shankar Aiyar told the Lok Saba today.
 
The increase results from the fact that refineries are paid the import parity price for petroleum products by the oil marketing companies which actually sell the product to retail consumers.
 
Bucking the trend were Indian Oil Corporation's refineries at Guwahati and Digboi where the refining margins fell during the period though its Mathura refinery was among the biggest gainer with its GRM rising 303.45 per cent to Rs 5,908 per mt in July-September over the same period the previous year.
 
The GRM for the Bongaigaon Refinery and Petrochemicals Ltd rose 127.35 per cent to Rs 3250.08 per mt from Rs 1,429.5 a year ago.
 
"The GRM has gone up by an average of Rs 1,000 per mt between July-September, 2003, and July-September, 2004. However, this increase does not dramatically alter the pricing situation--95 per cent of a refined product's price is made by crude oil price," Aiyar had said in the Rajya Sabha on Wednesday.
 
The price of the Indian basket of crude oil was at $38.82 per barrel in November.
 
On the other hand, globally, kerosene was at $53.56 per barrel, LPG was at $469 per mt, petrol at $51.74 per barrel and diesel at $50.90 per barrel during the month. Indian refiners, therefore, enjoy a reasonable spread between the crude oil price and the product price.

Upward trend

  • Increase results from fact that refineries are paid the import parity price for petroleum products by oil marketing firms which sell the product to retail consumers
  • Bucking the trend were IOC's refineries at Guwahati and Digboi where the refining margins fell during the period
  • In 1991 NLC had taken over the project for implementation, but later it abandoned it owing to financial reasons

 
 

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First Published: Dec 10 2004 | 12:00 AM IST

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