Oil ministry moots excise duty to soften oil prices Sunday, August 14 2005 17:26 Hrs (IST) - World Time -
New Delhi:
The Petroleum Ministry has proposed an increase of Rs 1-2 per litre in petrol and diesel prices and cut in excise duty on them to offset the impact of surging global oil prices.
Though the required increase in petrol prices is Rs 5.50 per litre and diesel Rs 3.75 a litre, the oil ministry has suggested to the Cabinet that if excise duty is cut by Re 1 per litre on each fuel, the required hike can be moderated, a senior official said.
The oil ministry has suggested that excise duty on petrol be brought down from the existing 8 per cent Rs 13 per litre to 8 per cent Rs 12 per litre.
On diesel it is suggested that excise duty be brought down from 8 per cent Rs 3.25 a litre to 8 per cent Rs 2.25 per litre.
The issue may be considered by the Cabinet this month.
The oil ministry has argued that all state-run oil marketing firms, including Indian Oil Corp, BPCL, HPCL and IBP will turn sick if prices were not raised. All the companies
have posted net losses for the first quarter of this fiscal.
According to the ministry's estimates, IOC's subsidiary IBP will be the first to turn financially sick by as early as next month as losses arising from freeze on fuel prices will
erode its net worth.
BPCL will turn sick in just over a year from now and HPCL will take just 20 months to be referred to Board of Industrial and Financial Restructuring, Petroleum Secretary S C Tripathi had written to Cabinet Secretary B K Chaturvedi recently.
IOC (Indian Oil Corporation), the country's biggest oil company, will turn sick in 35 months from now if petrol, diesel, LPG and kerosene prices are not changed in line with the spurt in global oil prices.
IOC, which reported its first ever-net loss of Rs 54.2 crore in April-June quarter, suffered an estimated loss (including depreciation) of Rs 744 crore in July alone.
BPCL netted a loss of Rs 400 crore over Rs 431.3 crore loss in Q1, while HPCL saw Rs 475 crore loss in July on top of Rs 507.89 crore net loss of April-June quarter.
