Oil firms raise ATF and commercial LPG prices

Subject :Economy

Section: Msc

In News: Jet fuel or ATF and commercial prices raised.

Key Points:

Jet fuel or ATF price on Sunday was hiked by 5 per cent and commercial cooking gas (LPG) rates were raised by a steep ₹209 per 19kg cylinder, in line with the firming up seen in international benchmarks.
However, the price of domestic LPG the one used in household kitchens for cooking purposes remained unchanged at ₹903 per 14.2kg cylinder.

How is ATF priced?

India has introduced a new pricing mechanism for ATF (jet fuel) beginning Q3 FY23.
The new price mechanism – which replaces the Import Parity Price based system – will be benchmarked on the MOPAG or Mean of Platts Arab Gulf and could bring in more parity between global crude price and jet fuel price in India.
Under the earlier system price reductions were not transferred to domestic market in a timely manner.
The new pricing mechanism will be “more transparent” and cushion airlines from ATF price fluctuations.
MOPAG pricing refers to paying the same price that is paid in Dubai for ATF.

LPG pricing:

The LPG prices are predominantly decided based on LPG prices in the global market and a mechanism called Import Parity Price (IPP) is used for price determination.
The formula for import parity price assumes that LPG is imported within the country.
Import Parity Price is based on Saudi Aramco’s LPG price Import Parity Price is based on Saudi Aramco’s LPG price and includes costs such as: custom Duty freight costs etc. These above costs are quoted in dollars and converted to rupees.
Onto these are added the domestic costs, Goods and Service Tax (GST) ,bottling charges, logistic costs, dealer commission, marketing costs, OMC margins etc.
The above costs give the retail selling price of an unsubsidised LPG cylinder.
The oil corporations are empowered to change prices every month.