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STC finalized imports of its entire annual petroleum product from Mangalore Refinery and Petrochemical Limited (MRPL) situated in India for the years 2006/2007.

A further 3 year deal until July 2010 was finalized on 6 July 2007.

The components of new price structure are as follows:

Mogas per litre

Gas Oil per litre

Transfer price to oil Companies

Rs 39.19

Rs 31. 79

Wholesale Price

Rs 46.99

Rs 38.79

Retail Price ( Price at filling station)

Rs 48.5

Rs 39.9

To directly pass through to the market all price changes on shipment of Gasoil and Gasoline which are imported by the STC, the Automatic Pricing Mechanism (APM) was introduced in April 2004.

At three month intervals, the changes in retail prices occurred and the frequency of these changes became monthly as from November 20008. Fuel Oil was included under the APM in July 2006.

Consumers had difficulty to reconcile the domestic price changes certified at each APM with actual oil price movements on the world market.

Windfall losses/gains

Based on the stocks held by oil companies and filling stations on the date on which prices are changed after each APM exercise, they experience windfall gains or windfall losses. They stand to gain on stocks already held by them when price goes up. The amount of the gain, referred to as windfall gain, is determined by STC and they collect that amount from the oil companies and filling stations.

They stand to lose on existing stock when price goes down. Such losses, referred to as windfall losses, are paid by STC.

In the following APM exercise, such payments are considered as a charge to be added to the cost of products. As a result, in the following month, a refund of windfall loss in the month becomes an added cost to fuel pricing. The reverse is also true when price goes up.

Consequently, windfall loss results in price increase and windfall gain results in price decrease.

Exchange rates in price fixing

For pricing, an estimated exchange rate is used in practice. It is the rate at which the corporation or the Bank of Mauritius has purchased USD.

Implementation of Petroleum Pricing Mechanism

A petroleum pricing system (PPS) has been introduced for the pricing-fixing exercise. The main objective of PPS is to mitigate the effects of world price movements on actual retail price.

The price for the products will be initially based on the forward prices for the next six months plus a margin and on the average of the price for last six months. To enable the price stabilization to be supported, this margin is required to build up a buffer.

Price stabilization Account

Price Stabilization Account has been introduced to maintain a single price over a longer period of time. PSA deal with the payments and refunds of windfall gain/loss.

The consumer protection (Control of Price of Petroleum Product) Regulations 2011

According to regulation 5, the corporation shall, in computing the retail price of a petroleum product, take into account the CIF, the excise duty, the Maurice Ile Durable levy chargeable under the E