Deora bats for fuel duty cuts
In one of his last official tasks as petroleum minister, Murli Deora met finance minister Pranab Mukherjee on Wednesday to press for a reduction in excise and customs duty on crude oil and petroleum products to try and bring down the retail prices of petrol and diesel.business Updated: Jan 19, 2011 21:47 IST
In one of his last official tasks as petroleum minister, Murli Deora met finance minister Pranab Mukherjee on Wednesday to press for a reduction in excise and customs duty on crude oil and petroleum products to try and bring down the retail prices of petrol and diesel.
He was assigned to the corporate affairs ministry during the reshuffle of the Union Cabinet later in the day.
Government officials said that given the ongoing political furore after the two recent hikes in petrol prices—by R2.96 per litre on December 15 and by Rs 2.50 per litre on January 15 — the finance ministry may be forced to slash the excise duty on petrol and diesel as also the customs duty on crude oil in the budget proposals next month.
“Much against its wishes, the finance ministry may have to forego revenues to cool auto fuel prices,” a senior petroleum ministry official told HT.
Petrol has seen six price hikes since June 26 after the government decided to deregulate its pricing mechanism and link it with international oil prices.
Deora demanded the abolition of import duty on crude oil and cuts in excise duty on petrol and diesel to avoid further fuel price hikes. “We are demanding rollback of 5% customs duty that the finance minister had imposed on crude oil in his last budget,” he said. “Also, the R1 per litre increase in excise duty on petrol and diesel (also done in budget for 2010-11) needs to be reversed.”
A R1 cut in excise duty on petrol and diesel would result in a revenue loss of an estimated R8,000 crore (about R4,000 crore each for petrol and diesel). A one percentage point cut in customs duty on crude oil would result in an estimated revenue loss of about '3,000 crore.
“Crude oil prices have touched $92 per barrel and there are some forecasts that it will go to $100 a barrel soon. There is definitely a case for rolling back duties,” Deora felt.
State-owned oil marketing companies are losing R1.22 per litre on petrol sales despite last week’s petrol price hike, and nearly R7 per litre on diesel.
They are projected to lose Rs 73,600 crore in revenues in 2010-11. Deora wants the finance ministry to compensate 55% of this loss through budgetary allocations.