Ministry says cut import duty on crude to 10 per cent
22 January 2000
The petroleum ministry has asked the finance ministry to reduce the duty on crude imports from the current 20 per cent to 10 per cent. It says this is in line with the recommendations of the expert technical group on phased deregulation of the oil sector.
Ram Naik, minister for petroleum and natural gas, says his ministry has made presentations to the finance minister and has been assured that the proposal will be under consideration while preparing the budget for the year 2000-2001.
Considering international oil prices and a 60 per cent increase in domestic refining capacity during the current financial year, slashing the duty on crude imports will reduce the burden on the oil pool account and save forex outgo, say industry sources.
The oil import bill has already been reduced to $ 13 billion, that is, by by $2 billion, following an expansion of India's refining capacity to 106.5 million tonnes from 61.5 million tonnes in 1998-99. In the absence of capacity addition, the import bill would have been $15 billion. The main contributors to capacity addition have been Reliance Petroleum’s Jamnagar refinery (27 million tonnes per annum), Panipat refinery (6 million tpa), HPCL’s Vizag refinery (3 million tpa), and Mangalore Refinery and Petroleum’s Mangalore refinery (6 million tpa).
The commissioning of new refineries in the current fiscal has led to a change in the composition of the oil import bill. Last year, the bill was divided equally between crude and petroleum products. Now, with new refining capacities beoming operational, the proportion of crude in the import bill will rise.
With more refining being done in India, clearly greater value is being added within the country. But the savings will come in more ways than one. Higher crude imports, compared to products, will also have a bearing on the saving. The import of petroleum products often requires specialised vessels, and higher freight charges. Also, most of the new refineries have their own jetties and berthing facilities. This means lower demurrage charges incurred by refiners.
