The Hindu Business Line : Talks on compensation package for oil cos soon

The Union Minister for Petroleum, Mr.Murli Deora, along with the Petroleum Secretary, Mr M S Srinivasan, after a meeting with senior Cabinet Ministers on the petroleum pricing issue in the Capital on Wednesday. —

Our Bureau

Advertisement

New Delhi, May 28 Consultations continued over the bail out package being worked out for the public sector oil marketing companies (OMCs), with another round of deliberations of the core Group of Ministers expected soon.

A meeting of a core group on Wednesday remained inconclusive on the compensation package that includes a price hike and duty rejig for the OMCs which are taking a hit on their profitability due to selling petroleum products below the market price proposal to raise fuel prices.

However, the Finance Ministry put out an official statement saying reports of certain new tax proposals were totally baseless.

The External Affairs Minister, Mr Pranab Mukherjee, the Finance Minister, Mr P. Chidambaram, and the Petroleum Minister, Mr Murli Deora, along with the Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia, held discussions on the issue. Indications are that the Group of Ministers on fuel prices headed by Mr Mukherjee is likely to meet sometime soon and may decide on the issue before the proposal is put before the Cabinet Committee on Economic Affairs for approval.

Duty cuts

To minimise the hike on the retail selling prices of petrol, diesel, and cooking, the Petroleum Ministry has been seeking duty cuts. But the Finance Ministry has not been budging. The Petroleum Ministry has been proposing Rs 10 a litre hike in petrol, Rs 5 a litre on diesel and Rs 50 a cylinder on LPG. Apart from this, the Ministry has also been seeking customs and excise duty cuts. This would help cut the under recoveries being suffered by the OMCs on the sale of four petroleum products below the market price. The estimated under-recovery for the fiscal is estimated at Rs 2, 25,000 crore.

The Ministry was seeking reduction in customs duty on crude oil to zero from five per cent and that on petrol and diesel to 2.5 per cent from 7.5 per cent. It is also seeking reduction of excise duty on the two products by half. Currently, petrol attracts Rs 14.35 a litre excise duty and diesel Rs 4.60 per litre.

The three OMCs – Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation – together are losing Rs 16.34 a litre on petrol, Rs 23.49 a litre on diesel, Rs 305.9 an LPG cylinder and Rs 28.72 a litre on kerosene.

In a statement issued here, the Polit Bureau of the Communist Party said, “It is necessary that the Government impose a windfall tax on private refiners, who do not contribute to meet the oil subsidy bill.” A windfall profits tax is a tax on profits that ensues from a sudden windfall to a particular company or industry.

“The Government should impose a windfall profits tax on private/joint venture oil producing companies and private standalone refineries earning huge profits through import parity policy of pricing. In no case can the UPA Government pamper the private oil companies to make windfall profits and at the same time increase the price of petrol and diesel and burden the people further when they are suffering from steep price rise of essential commodities,” the statement said.

This along with the reduction of customs duty on crude oil and excise duty cut of petroleum products without any ad valorem content should help to meet the situation arising out of the steep rise in world oil prices and providing relief to OMCs, the statement said.

More Stories on : Petroleum | Petroleum

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page