Rich oil firms turn the screws on aam aadmi
The question state-run petroleum firms should answer is while they hike prices to make up for losses, how come they feature on the Fortune 500 list of the world’s richest firms. Anupama Airy reports. Ambitious plans, taxing times | Mamata asks party MPs to be in Delhi to meet PMdelhi Updated: Nov 07, 2011 02:52 IST
As the common man deals with another blow to the household budget in the form of one more hike in petrol prices — the second in less than two months —politicians continue to bicker and analysts try to come up with a credible explanation.
But the question state-run petroleum firms should answer is while they hike prices to make up for losses, how come they feature on the Fortune 500 list of the world’s richest firms.The wonder of it all is that the very companies which are turning the screws on ordinary consumers, citing financial reasons, have enough resources — up to Rs 5,500 crore — to expand their operations by setting up 11,000 new petrol pumps all over the country in the next two years.
In other words, Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation will be spending Rs 50 lakh for each of these new filling stations.
They now have 42,000 stations across India.
"Let’s be realistic. We have the option of either expanding or stopping our business," the chief executive of an oil firm told HT, requesting not to be named.
"Why are you catching the ant when the elephant and the tiger are riding. Is the aam aadmi ready to face supply cuts and see us go into losses?" he asked.
Oil firms justified the recent Rs 1.82-per-litre petrol hike, saying they’re already selling all fuels well below the actual costs, resulting in rising ‘under-recoveries’ or revenues lower than mandated by the costs.
This fiscal (2011-12) under-recoveries are projected to touch Rs 1,32,000 crore compared to Rs 78,000 crore last year.
In Delhi, for every litre of petrol sold at pumps for Rs 68.64, about 40% or Rs 29 goes to the coffers of state governments and the Centre in the form of various taxes and duties.
An amount of Rs 15 goes as excise duty and education cess to the central government, Rs 12.50 to the state government as sales tax and Rs 1.50 a litre as dealer’s commission for services at petrol pumps.
Although the government does not put out numbers, conservative estimates suggest that half the excise duty collection in the country is from petroleum products.
Besides, the government also offers subsidies to oil companies to ease the burden of loss in revenues.
The government’s justification was summed up by a petroleum ministry official: “The subsidy support to oil companies is being given to reduce the burden on the common man.” It’s no surprise that opposition parties have also slammed the government’s unwillingness to cut taxes on petrol and diesel.