India: Petroleum ministry seeks Re 1 per litre excise cut on fuel

India: Petroleum ministry seeks Re 1 per litre excise cut on fuel

Thursday, August 10th 2006

The Petroleum ministry has sought a Re 1 per litre excise duty cut on each litre of petrol and diesel, virtually ruling out any imminent price hike despite simmering global crude oil prices.

A letter to this effect has been written to the Finance Ministry requesting a Re 1 cut and the decision of the Finance Ministry is awaited. The duty cut, if accepted, would result in a revenue loss of around Rs 5,000 crore to the Finance Ministry.

The Finance Ministry is considering the proposal but, meanwhile, oil companies could go ahead and increase prices, it would leave any hike in retail fuel prices untouched, official sources said.

With global crude oil prices hovering at $ 77 a barrel today, Indian oil firms had pegged the retail prices at a crude price of $ 63 per barrel and are incurring huge losses on petrol and diesel sales.

The specific excise duty on petrol is Rs 13 a litre, and Rs 3.20 a litre on diesel.

Meanwhile, oil companies may have to give a Rs 1000 crore as excise dues on LPG and kerosene for the period between April, 2002 and March, 2006. LPG and kerosene are highly subsidised products and there is a huge difference between the refinery gate price and the retail price of the cooking fuel.

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