Petroleum minister seeks Customs duty cut on crude oil
January, 20th 2011
The oil ministry has asked the finance ministry to roll back customs and excise levies on crude oil and petroleum products imposed in the Budget last year. It says the move will help avoid further pressure on retail prices of petrol, diesel, cooking gas and kerosene.
"Finance ministry must rollback customs duty imposed in the last Budget and also the excise duty on petrol and diesel to both consumers as well as oil companies," petroleum minister Murli Deora said on Wednesday morning, hours before the cabinet reshuffle. The finance ministry had re-imposed 5% customs duty on crude oil and products, which were cut in mid-2008 when global crude oil prices soared to an all-time high at $147 a barrel.
The oil ministry is also demanding slashing of excise duty by Re 1 a litre on petrol and diesel. Excise duty was cut in 2008 to soothe pump rates but was re-imposed in the Budget after crude oil prices crashed to below $40 a barrel.
Current import duty on crude oil is 5% and it is 7.5% on petrol and diesel. The excise duty, a central levy on domestic production on petrol is 14.35 a litre, 26% of its pump price. The duty on diesel is 4.60 a litre.
"Crude oil prices have touched $92 per barrel and there are some forecasts that it will go to $100 a barrel soon. We protected the consumer during a similar rise in crude prices in 2008 and we can do the same this time also by reducing duties," Mr Deora said.
Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corporation (HPCL) have raised petrol prices by almost 5.50 a litre in one month but they are still selling it 1.22 a litre below the market rates. Price of diesel, a regulated fuel, has not been changed since June 2010, where state-run oil companies are incurring a revenue loss of 7 a litre. Their loss on kerosene is 19.60 a litre and 366.28 on a cooking gas cylinder. According to the oil ministry, the three firms are projected to lose 73,600 crore revenues in 2010-11.