Petrol Ministry seeks Rs 1 per litre excise cut
New Delhi, Aug 9: Petroleum Ministry has sought a Re 1 per litre excise duty cut on each litre of petrol and diesel, virtually ruling out any imminent price hike despite simmering global crude oil prices.
A letter to this effect has been written to the Finace Ministry requesting a Re one cut and the decision of the Finance Ministry is awaited. The duty cut, if accepted, would result in a revenue loss of around Rs 5,000 crore to the Finance Ministry.
The Finance Ministry is considering the proposal but, meanhwile, oil companies could go ahead and increase prices, it would leave any hike in retail fuel prices untouched, official sources said.
With global crude oil prices hovering at 77 dollars a barrel today, Indian oil firms had pegged the retail prices at a crude price of 63 dollars per barrel and are incurring huge losses on petrol and diesel sales.
The specific excise duty on petrol is Rs 13 a litre, and Rs 3.20 a litre on diesel.
Meanhile, oil companies may have to give a Rs 1000 crore as excise dues on LPG and Kerosene for the period between April, 2002 and March, 2006. LPG and kerosene are highly subsidised products and there is a huge difference between the refinery gate price and the retail price of the cooking fuel.
The Finance Ministry officials, however, calculate the tax incidence on the refinery gate price which has been at import parity levels. LPG today sells at a price which is lower by almost Rs 124 per cylinder than the refinery gate price.
The government yesterday told the parliament that along with oil companies, it has decided to absorb 87.5 per cent of burden of the escalated international prices of crude oil, leaving only a balance 12.5 per cent to be borne by the consumers by way of increase in petrol and diesel prices worldwide. In the context of unprecedented rise in international oil prices, government has adopted the principle of equitable burden sharing amongst the three stakeholders, namely, the consumers, the PSU oil marketing companies and itself to protect the interest of the common man and the vulnerable sections of the society, Minister of State for Petroleum and Natural Gas Dinshaw Patel said.
The minister said the oil marketing companies--IOCL, HPCL and BPCL are estimated to be suffering a total under-recovery of over Rs 73,500 crore during the current year.
Mr Patel said prices of kerosene and LPG have not been increased and a small increase has been made in price of petrol and diesel. Central taxes, both excise duty and customs duty on kerosene and LPG have been completely removed and is now 'nil'.
The customs duty on petrol and diesel has been reduced to 7.5 per cent from 20 per cent when government came to power, the Minister said.
Since LPG has been placed under 'declared good', the states are restricted to charge a sales tax of only four per cent.
He said ONGC/MRPL are not 'oil marketing companies', but are upstream and refining sectors respectively. ''They also do not market PDS kerosene and LPG,'' he said.
The Minister said the following PSUs are engaged in exploration activities: ONGC, OIL, GSPCL, IOC, BPCL, HPCL, NTPC and GAIL.
In the last three years (2003-06), oil and gas discoveries have been made by ONGC and OIL in Assam, Andhra Pradesh, Gujarat, Tripura, eastern and western offshore areas.
Mr Patel said India has a potential of about 28 billion tonnes of hydrocarbon resources falling in 26 sedimentary basins of India. Out of this, 8.2 billion tonnes of in-place reserves have been established, the Minister said.
The Bay of Bengal and Mahanadi area comprise five sedementary basins having a basinal area of 41,000 Sq KM. The total reserves in these basins are about 1135 MMT. The government, Mr Patel said, has awarded a total of 41 exporation blocks so far for exploration activities.
Twenty seven oil and gas discoveries have been made by private/JV companies 657.74 MMT of in place oil and gas reserves have been established.
Oil coast from the east coast is about 7,470 tonnes a day, whereas gas production is 2.3 MMSCMD.
Apart from 41 blocks, the government has offered 23 blocks under the ongoing VI bidding round of the New Exploration Licensing Policy (NELP), for which the bid closing date is 15th Spetember, 2006.
Oil prices have soared 25 per cent this year on political tensions that are feared could affect oil supply.
These are headed by Iran's determination to pursue a nuclear program and the war between Israel and Hizbollah, plus the actual loss of some 700,000 bpd of Nigerian production and Iraq's erratic exports.