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| Petrol, diesel price reduction only after excise cut: Deora | | | NEW DELHI, FEB 12
Petroleum Minister Murli Deora has asked Prime Minister Manmohan Singh for a Re one per litre excise duty cut on crude oil to enable a reduction in auto fuel prices, necessary to contain the growing inflation.
Deora has written to Singh and Finance Minister P Chidambaram stating that the rise in international oil prices this month has seen an erosion of gain on diesel sales. Oil firms are making a loss of Rs 0.30-0.35 a litre on the sale of this most consumed auto fuel, a top official said.
The hardening of international oil prices, which has seen Indian basket of crude rise from 51.74 dollars a barrel in the second fortnight of January to 56.18 dollars this month, has also reduced the profit made on petrol from Rs 3.50 a litre to less than Rs 2 a litre.
"For a very brief period, oil companies made a profit of about Rs 0.50 a litre on diesel but it has evaporated. There is a loss on diesel sale, leaving no scope of price reduction unless the Government decides to cut excise duty," the official said.
If Deora's request is heeded, petrol price can be cut by Rs 2 per litre and that of diesel by Re one per litre, the official added.
The current excise duty on diesel is 8.16 per cent plus Rs 3.32 a litre - the two together translating into a total levy of Rs 4.98 per litre. Last year, excise duty on diesel was Rs 3.41 per litre.
Revenues from excise duty on diesel have increased to Rs 24,214 crore in 2005-06 from Rs 16,338 crore a year ago. Revenue on diesel as a percentage of total excise revenues has increased to 22 per cent from 16 per cent.
"Finance Ministry is also getting increased revenues from raising cess on domestic crude oil to Rs 2,500 per tonne from Rs 1,800 per tonne previously," the official said.
It is slated to get Rs 6,700 crore this year as against Rs 5,100 crore previously, the incremental revenues more than compensating for the excise duty cut, he added.
The Petroleum Ministry was seeking a shift to specific duties on fuel from the current mix of ad-valorem and specific duties. The current excise duty on petrol is 8.16 per cent of ex-factory price plus Rs 13.26 a litre. |
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