The petroleum ministry has sought scrapping of the 5 per cent import duty on crude oil, in a move that would not only help cut revenue losses at public sector oil companies but also contain inflation.
Global crude prices hit $115 per barrel in intra-day trading on Thursday. The Indian crude basket on Wednesday stood at $ 107.14. The average price of the crude basket in April now stands at $ 102.15, a huge jump from the average price of $ 79.25 for 2007-08.
The Indian government has been trying to insulate consumers at home from rising crude prices, by allowing government-run oil companies moderate increases in retail prices. The subsidy on account of sales of petroleum products is shared between the government and the oil companies.
The revenue loss of public sector oil companies in 2007-08 is now been pegged at Rs 77,000 crore, inspite of an increase in prices of petrol and diesel by Rs 2 and Re 1 per litre respectively in mid-February this year. The government would meet 42.70 per cent of the under-realisation through oil bonds, while one-thirds would be shared by upstream oil companies — Oil and Natural Gas Corporation, Oil India Ltd and gas transmission major GAIL (India).
With crude prices rising again in the past week, the Petroleum Ministry is looking to further reduction in duties and taxes.
Crude oil imports from nominated blocks are subject to a cess of Rs 2,500 per tonne. Officials said there was an urgent need to streamline state-level taxes so that the cascading impact of rising prices is not passed on to the consumers.
India's crude oil import bill has moved up over 38 per cent to $61.16 billion in the first 11 months of 2007-08. India imported 111.089 million tonne of crude oil between April-February 2007-2008 for Rs 2,43,205.5 crore ($61.165 billion) when compared with 101.213 million tonne imported a year ago for Rs 2,00,321 crore ($44.124 billion), according to latest data available from the petroleum ministry.
India also imported 20.19 million tonne of petroleum products, mainly naphtha, LPG, kerosene and diesel, for Rs 54,180 crore ($13.4 billion).