labels: Oil & gas
Government may cut duties on fuel to lessen impact of price hike news
24 January 2008

Mumbai: The government is planning a reduction in duties on petroleum and its products to smoothen the effects of a proposed hike in fuel prices to compensate state-run oil firms, reports quoting petroleum secretary M S Srinivasan said.

The government currently levies an excise duty of 52 per cent on petrol and 34 per cent for diesel, which adds to the burden of both the consumer and state-run oil firms that have been selling fuel below cost.

An excise duty reduction of Re1 will fetch state oil firms Rs1,000 crore in petrol sales and Rs4,800 crore in diesel sales.

The government is expected to decide on raising the prices of petrol and diesel early next month, according to petroleum minister Murli Deora.

With the price of Indian crude oil basket hovering above $ 84 a barrel, any delay in revising the retail prices of petrol and diesel is bound to add to the woes of the state-owned oil marketing companies, which are facing revenue loss of Rs340 crore a day.

The retail prices of petrol and diesel were last revised in February 2007 taking the average crude oil price at $55 per barrel.

State-run oil marketing companies (OMCs) had been posting profit for the past three years largely on account of support from oil bonds and upstream discounts and sale of shares.

State oil firms Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL) and IBP reported a combined profit of Rs5,625 crore in 2005-06, while oil bonds and upstream products fetched an additional Rs25,939 crore.


 search domain-b
  go
 
Government may cut duties on fuel to lessen impact of price hike