Plagued by ‘corporate espionage’, the oil and gas sector found little mention in Arun Jaitley’s Budget, except subsuming education cess with excise duty on petrol and diesel.
“Some of the key proposals for the sector were not considered as there was a fear some may have found their way out (stolen documents),” a source-in-the-know said.
The fear of angering the middle-class and political uncertainty which BJP faces in Bihar restricted the Centre from imposing import duty on crude oil, as this would have meant immediate hike in fuel prices.
“In the case of petrol and diesel such specific rates are being revised only to the extent of subsuming the quantum of education cess presently levied on them, keeping the total incidence of excise duties unchanged,” Finance Minister Arun Jaitley said. After the change, the additional duty of excise on sale of petrol and diesel will be ₹6 a litre from ₹2 a litre. To ensure that the net duty on petrol and diesel does not change, the Cenvat rates on the two oil products have also been decreased accordingly.
However, Jaitley’s decision did not give any respite to the customers, as state-owned oil marketing companies continued with their fortnightly revision of petrol and diesel prices. The retailers increased the retail prices of petrol and diesel by ₹3.18 /litre at Delhi (including State levies) and ₹3.09 /litre, respectively. The retail price will vary from State to State depending on local taxes and levies.
The oil companies said that this increase has been done in keeping with rise in international prices and the rupee-dollar exchange rate has also depreciated during this period. Jaitley has taken average crude price at $70 a barrel for calculating fuel subsidy. For the new fiscal, the fuel subsidy outgo has been provided at ₹30,000 crore, mainly for domestic LPG and kerosene sold under PDS.
The Government, upstream companies and the oil retailers, together, shoulder the burden of revenue loss incurred by oil retailers for selling fuel at controlled price. Lack of certainty in subsidy sharing mechanism has affected the Centre’s plans to dilute stake in ONGC and Indian Oil Corporation.
“The Finance Minister has not addressed many of our genuine expectations. We wanted the Government to remove basic customs duty on imported natural gas, currently at 5 per cent as it is an inverted duty. There is shortage of domestic natural gas and imported natural gas is very expensive, thus putting additional burden on us. The Government has also not provided relief to E&P companies for their demand of service tax credit,” said LK Gupta, Managing Director and Chief Executive Officer, Essar Oil.