Deora hopeful for his ministry's proposal acceptance

New Delhi, Jan 24 (UNI) Petroleum Minister Murli Deora today said his ministry's proposals for the one rupee excise cut on diesel to contain inflation is still under consideration of the Finance Ministry.

''The matter is still under consideration of the finance ministry,'' Mr Deora told reporters here.

Yesterday, the minister met Finance Minister P Chidambaram and sought removal of excise duty on diesel to contain inflation at 6.12 per cent, the highest in two years.

As part of pre-budget consultation, Mr Deora also sought infrastructure status for oil and gas pipelines.

This is to encourage prospects in unexplored basins and promoting use of environment friendly natural gas as fuel, Mr Deora said.

The current excise duty on diesel is 8.16 per cent plus Rs 3.32 a litre - which comes at Rs 4.98 per litre. Last year, excise duty on diesel was Rs 3.41 per litre.

Revenues from excise duty on diesel have increased to Rs 24,214 crore in 2005-06 from Rs 16,338 crore a year ago. Revenues on diesel out of the total excise revenues increased to 22 per cent from 16 per cent.

Mr Deora also sought an Income Tax holiday of 7-10 years in Oil Exploration and Production sectors.

The price of petrol was cut last by Rs 2 a litre and diesel by Re 1 on November 29, 2006, following the softening of international crude prices to below 60 dollars a barrel.

On Friday, the Petroleum Minister had ruled out any reduction, any immediate cut in petrol and diesel prices.

He said the Government would wait for the international crude prices to stabilise.

Mr Deora said the Government was closely watching the downward trend, but a decision could not be taken on the basis of crude prices falling below 50 dollars for just for a day or two.

The Government would take a decision about ''revising the possibility of any cut'' at an appropriate time, Mr Deora said.

However, he said due to the limited storage facilities, buffer stocks could not be increased immediately to take advantage of the lower prices, adding that the Government planned to increase the stocks to around one million tonnes of crude, but this would take some time.

The Government has also decided to continue subsidy on kitchen fuels till March 31, 2010. The oil ministry has set the ball rolling to seek Cabinet approval in this regard and is suggesting changes for the entire subsidy to be borne through the Budget.

The subsidy on PDS kerosene and domestic LPG was to be phased out by March 31, 2005 for dismantling of the administered pricing mechanism (APM) for petroleum products. This deadline was extended by two years to March 31, 2007.

The government is incurring losses amounting to Rs 14,000 crore due to the subsidies.

UNI