Petrol "The magic word Notional loss"

Understanding Petrol Price Hike

You may come across speeches of different level authorities of petroleum ministry also many central ministers stating Government is losing 2 lakh crore in selling petrol under low price in market

But look at the balance sheet of ONGC http://www.ongcindia.com/financial_2.asp

They showed 52,000 INR profit in the past year then what the Government is saying whats the truth ????

Wheather the three government petroleum companies BPCL,IOC,HP are losing in lakhs are earning in crores????

First we have to understand how petroleum price is calculated in India

If the cost price of petrol per litre is Rs 58.90, then


    Basic Price: Rs 28.93
    Excise duty: Rs 14.35
    Education Tax: Rs 0.43
    Dealer commission: Rs 1.05
    VAT: Rs 5.5
    Crude Oil Custom duty: Rs 1.1
    Petrol Custom: Rs 1.54
    Transportation Charge: Rs 6.00
    Total price: Rs 58.90

so we are paying much for Government through petrol products

but the Government is saying again and again we are losing in lakh crores..

The actual fact is the loss stated by Government is actually NOTIONAL LOSS

NOTIONAL LOSS ------> LOSS IN PROFIT

i.e If you are running a store named XXX Stores and you have  competition with the neighbor shop YYY Stationary so you selling a pencil for Rs.12 which is sold for 14 Rs. by your competitor

but note both of you not selling for loss the actual cost may be 8 or 10 Rs. so Mr. XXX store owner can state i am losing 2 Rs. every pencil (comparing with price of YYY stores) that 2 Rs. loss is stated as the Notional loss.

I think you may understand the term Notional loss...

So our petroleum companies are facing notional loss of 2 Lakh crore or more because they are selling in lower price comparing to their counterparts that notional loss is equated by the subsidy from the Government

So understand whenever the fuel price is hiked in the name of Managing loss they are trying to cheat us They are just using our innocence