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Rangarajan report in two parts
The C Rangarajan committee on tariff structure and long-term pricing of petroleum products is expected to submit its report in two parts.
The C Rangarajan committee on tariff structure and long-term pricing of petroleum products is expected to submit its report in two parts.
The first part, likely to be submitted to the government later this week, will deal with the issue of customs and excise duty structure. This will form the bulwark of budgetary proposals to be announced at the end of the month.
The second part of the report will deal with long-term policy and pricing strategy and will coincide with the Kirit Parikh committee report on overall energy policy paradigm and energy security. This part of the report is expected to be available with the government by June this year, of ficials have told the Hindustan Times. Apart from Rangarajan, other members of the committee are Petroleum Secretary, Planning Commission member Kirit S Parikh, chief economic adviser Ashok Lahiri, Finance Ministry, Chief Economist of ICRA Saumitra Chaudhari, and Director of IIM, Ahmedabad BH Dholakia.
The Petroleum Ministry has underlined the need to reduce customs duty on crude oil as well as petroleum products so as to enable the oil companies to make a reasonable return on their investment. To protect consumers from surge in crude oil prices, it favours specific duties against advalorem duties. The government will have to take a close look on the issue considering the revenue implications.
Apart from this, the Petroleum Ministry favours a big push to domestic oil and gas hunt through a slew of fiscal incentives including infrastructure status to exploration and production business and exemption from service tax. In its wishlist for the budget, it has sought infrastructure status to E&P business, LNG import projects and cross-country pipelines so as to give these a 10-year tax holiday. To promote domestic E&P, it has also sought eliminating service tax on survey and exploration of mineral.
A major concern has been expressed over the losses suffered by the PSUs. IOC and IBP, which account for nearly 55 per cent of public sector market share in petroleum products, have taken a hit of Rs. 9,020 crore in the nine months of the current fiscal. IOC posted a loss of Rs. 5.83 crore in the third quarter of the current fiscal, while IBP suffered a loss of Rs. 96 crore.
