North Block probes fuel under-recoveries
The Finance Ministry is digging hard into the Petroleum Ministry's claims relating to under recoveries by Govt-owned oil marketing firms, report Deepak Joshi and Gaurav Choudhury.
The Finance Ministry is digging hard into the Petroleum Ministry's claims relating to under recoveries by government-owned oil marketing companies, even as the latter has been pushing for duty cuts and a hike in retail fuel prices so to tide over the sharp rise in global crude prices.
In a recent communication, North Block has sought details from the Petroleum Ministry on estimates that under-recoveries by oil companies would touch Rs 69,700 crore in 2007-08.
“The product-wise break-up of under recovery may be kindly indicated," the ministry said in the letter. "The freight on board (f.o.b.) value taken to estimate the under recovery for petrol and diesel in rupee terms and the average international f.o.b. value of petrol and diesel during April-November 2007.”
The Finance Ministry appears to be of the view that the numbers relating to losses could be overstated, if they are based on f.o.b. value in dollar terms. That is because the rupee has appreciated nearly 12 percent in the past year, giving some cushioning to oil companies against surging crude prices in the international market.
Similarly, the Petroleum Ministry wants a reduction in ad valorem duty to zero and if that is done, the ministry’s projections suggest, the exchequer will suffer losses of Rs 13,500 crore in the next fiscal year.