Despite rate cut, fuel costlier in Punjab than Chandigarh, HP

Vijay C Roy

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Tribune News Service

Chandigarh, February 19

The Punjab government slashed VAT on petrol and diesel, bringing down the prices by Rs 5 and Re 1, respectively. However, despite the rate cut, the price of diesel, which generates maximum volume in the state, is still on the higher side as compared to Chandigarh, Himachal and J&K.

On an average, the diesel price in Punjab is higher anywhere between 0.90 paise and Rs 2.76.

According to petrol pump owners, the sale of petrol may grow with the rate cut but it will have a little impact on diesel sales. According to them, petrol pumps located in border areas such as Pathankot, Gurdaspur and Mohali will still have to struggle. There are around 750 petrol pumps located bordering Chandigarh, HP and J&K.

The diesel sale in Punjab is under pressure for long because of high VAT. “We were expecting at least Rs 3 per litre cut in diesel prices but it was not done. Overall, the reduction in petrol prices is a welcome step but it is the diesel which generates volume,” said Gurmeet Monty Sehgal, spokesperson for the Punjab Petrol Pump Dealers Association.

The total diesel sale in Punjab was 23.55 lakh MT during April-December 2018 as compared to 24.65 MT in April-December 2017. The sales witnessed a negative growth of 4.5% during the period. 

As compared to Punjab, Chandigarh witnessed a growth of 68.9% in diesel sales, followed by Himachal (4.6%) and J&K (3%). 

The sale of petrol in Punjab witnessed lower growth as compared to neighbouring states. It was 6.56 MT during April-December 2018 as compared to 6.36 MT in April-December 2017.

The sale in Chandigarh grew by 18.8%, followed by J&K (11.2%) and HP (7.5%).

According to experts, data suggests the sales had been diverted to neighbouring states where the VAT rates were lower. 

Because of high VAT rate, the state was the only northern state which has seen a decline in petroleum revenue by Rs 175 crore in FY18 whereas Haryana, Rajasthan, Jammu & Kashmir, Himachal Pradesh and Delhi have registered a positive growth.