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Our Bureau

Kolkata. March 14 The West Bengal Government has requested the Centre to roll back the five per cent import duty on naphtha.

The State Government feels that the decision would substantially erode the profitability of its showcase project, Haldia Petrochemicals Ltd.

According to sources, in a communication to the Union Finance Minister earlier this week, the State Commerce and Industry Minister, Mr Nirupam Sen, indicated that the Budget proposals on customs duty on naphtha, if implemented, would cost the standalone petrochemical project dearly.

Since domestic refiners sell naphtha on landed price basis, the import duty will only increase the feedstock price. Since product prices are also determined on landed price basis, there is no way that HPL can pass on this additional burden to consumers.

When contacted, the HPL Managing Director, Mr Swapan Bhowmick, told Business Line that the initial estimates suggest that re-imposition of five per cent customs duty will hit the company’s bottom line by approximately Rs 300 crore.

“The phenomenal rise in crude prices had resulted in 37-38 per cent increase in naphtha price during 2007-08. Since product prices did not move up to the same extent, the petrochemicals industry was under severe pressure during this fiscal,” he said.

“Assuming that high crude prices are here to stay, the import duty on naphtha will simply add to our problems in the next fiscal,” Mr Bhowmick added.

More Stories on : Petrochemicals | Excise and Customs | West Bengal

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