The Hindu Business Line : Officers body of oil cos seeks review of petro-products pricing

THE Oil Sector Officers' Association (OSOA) has urged the Government to immediately review the pricing mechanism of petroleum products to help oil companies come out of the red.

In a memorandum to the Prime Minister, Dr Manmohan Singh, the association, which represents 45,000 officers, has sought his intervention to resolve the financial crisis faced by public sector oil companies due to the rising international crude prices. The association has requested the Government to consider giving the oil companies the freedom to increase the prices of controlled products in line with the market-determined prices in phases to make the oil industry profitable in the long run.

The OSOA has called for the rationalisation of duties. The association felt that that the Government should restore the duties on both crude and petro-products to specific rates instead of the current ad valorem.

Seeking Government intervention, the OSOA mooted the imposition of oil cess in line with the education cess to reduce the Government burden on subsidy and minimise the burden on the consumer.

The soaring crude oil price has hit all the downstream oil companies. The companies are faced with severe losses and a cash-crunch. They have already clocked losses in the first quarter of the current fiscal and are set to erode their net worth if the situation continues.

The oil industry has been contributing significantly to the national exchequer in the form of excise duty, sales tax and various other statutory duties, which are being spent by the Government on welfare and development projects.

The profits earned by these companies are also distributed in the form of huge dividends apart from huge corporate taxes, which also go to the Central exchequer.

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