The Hindu Business Line : Fuel, feedstock prices to go up from today

Naphtha, furnace oil, bitumen, aviation turbine fuel ... in fact all products except petrol, diesel, LPG and kerosene will cost more by approximately Rs 10 per kilolitre as oil companies have passed on the burden of two per cent education cess, announced in the Budget, to their consumers.

According to officials of oil companies, consumers could expect an increase in petrol, diesel and LPG prices on July 15, 2004 when oil marketing companies are scheduled to review product prices.

"The education cess is Cenvatable. It has been passed on to customers. We will review prices of controlled products on the 15th of this month. Prices of decontrolled products have already been hiked," a senior BPCL official told Business Line.

The Finance Minister, Mr P. Chidambaram, had said that the Government hopes to raise Rs 4,000 crore through the two per cent education cess.

Analysts have already warned that increase in oil prices would lead to escalation in overall inflation levels.

The cess will be charged on excise duty payable on the petroleum products.

Most petro products attract approximately average 30 per cent excise duty, except LPG and LNG, etc.

Although exact details of the increase in prices could not be obtained, officials said that the cess has been calculated on the excise duty payable per tonne of the fuel and feedstock. This varies from product to product.

Power producers will have to approximately pay an extra Rs 40 per tonne for naphtha.

This hike will not affect agricultural users, as excise duties are not applicable to the sector, an Indian Oil official said.

The education cess and dividend payout tax announced in the Budget will mean additional burden of approximately Rs 500 crore on the three major oil marketing companies - Indian Oil, BPCL and HPCL - according to officials.