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Naik hints at excise relief to cushion fuel price hike

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Mr Ram Naik, Union Minister for Petroleum and Chemicals, addressing a press conference in Hyderabad on Tuesday.


THE Union Minister for Petroleum, Mr Ram Naik, is awaiting the arrival of the Finance Minister, Mr Jaswant Singh, from abroad to discuss the important issues of adjustment of the excise duty on petrol and diesel to offset the recent increase in fuel prices.

Mr Naik said the Government would look into the vagaries of international oil prices every quarter and try to adjust the excise duty. For instance, when the international price of petrol rose from $20 to $25 per barrel, the Government had reduced the excise duty by two per cent in June this year.

Even now, he said, the consumer could expect an encouraging response from the Government. He, however, did not disclose by how much the duty would be reduced. "It can be more or less than two per cent," Mr. Naik replied in response to a question in this regard.

The Minister said dismantling of administrative pricing mechanism and deregulation of the oil sector was a continuing process since 1997 in which the Congress(I), the Janata Dal, the Communist Parties, the BJP and the NDA were involved. The current Government at the Centre had stuck to the time schedule in this aspect and implemented the decision.

Consequently, the oil marketing companies look into the vagaries of prices in the international market every 15 days and either reduce or increase the prices accordingly. And, "international oil markets are not steady, prices go on changing as in a share market."

The Minister clarified that he was not opposed to disinvestments in the public sector oil companies. "Not agreeing to strategic sale does not mean opposing disinvestments," he said and added that in a strategic sale the ownership was concentrated, the entire company was handed over to the highest bidder. On the other hand, in a public offering of shares, the ownership of the company would be widespread.

According to him, each public sector undertaking in the oil sector is worth Rs 25,000 crore. All this is people's money and people should be benefited from their disinvestments. In fact, out of the Rs 9,000 crore of disninvestment proceeds in the country, Rs 7,000 crore are from the oil companies.

Stating that India was heavily dependent on oil imports, he said that the NDA Government had taken several measures to overcome this dependency. From January, next year, it had made the use of five per cent ethanol-blended petrol mandatory in nine States. In the second stage, the mandatory use would be extended to all the States in the country. In the third phase, the percentage of ethanol in petrol would be increased to 10. Research was also being conducted with cooperation of Brazil regarding the possibility of blending ethanol with diesel. The Minister said that the country would be able to save Rs 4,000 crore worth of foreign exchange by reducing oil imports by five per cent.

Besides, he said, ONGC Videsh Ltd was acquiring a 20 per cent stake in Sakhalin Oil Fields in Russia at a cost of Rs 8,000 crore. From this, the country would get 4-8 million tonnes of crude oil from 2005 onwards apart from gas, which would be available from 2008. The country had also entered into another agreement in Vietnam, while in Sudan India was acquiring a 25 per cent stake in an oil-producing field at a cost of Rs 3,750 crore in which China, Malaysia and Sudan were partners.

Mr Naik said that any company that invested Rs 2,000 crore and above in infrastructure activity would be given oil marketing rights. So far, four such companies - Reliance, Essar, ONGC and Numaligarh Refinery Ltd - were given these rights. They would be establishing 8,659 additional petrol and diesel outlets creating 45 per cent additional marketing avenues in the country.

With regard to liquefied petroleum gas (LPG), the Minister said that his endeavour was to ensure that 50 per cent of the country population would use it as a cooking fuel by the next couple of years. At present, LPG was being used for domestic purposes by 30 per cent of the population. "Whoever wants LPG, the Government will provide," he said.

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