The Hindu : Excise duty for oil may be revised

Online edition of India's National Newspaper
Wednesday, Oct 02, 2002

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National

Excise duty for oil may be revised

By Our Special Correspondent

HYDERABAD OCT. 1. The Union Petroleum Minister, Ram Naik, and the Finance Minister, Jaswant Singh, will meet immediately after the latter's return from abroad to consider a revision in the excise duty on petroleum products to offset the recent increase of prices.

This is in tune with the Government's policy to review every quarter the volatility of international oil prices and adjust the excise duty so that the entire burden is not passed on to the consumer. In June, it had cut the excise duty by two per cent.

Addressing a press conference here on Tuesday, Mr. Naik justified the frequent increase in prices of petrol and diesel, the latest being 23 to 28 paise from today, on the ground that the decision to dismantle the administered price mechanism from April 1 was the end result of a process in which the Governments led by P.V. Narasimha Rao, H.D. Deve Gowda and I.K. Gujral were involved.

As there was a foreign exchange outgo of Rs. 80,000 crores for importing 105 million tonnes of crude oil annually, oil companies were meeting every 15 days to look into the vagaries of the international market and reduce or increase prices accordingly.

On this basis, the price of petrol was reduced twice in the last six months by Re. 1 and Rs. 1.10. The upward revision was necessitated by the 50 per cent increase in the price of crude from $ 20 to $ 30 per barrel.

Explaining the steps to boost self-sufficiency in crude oil and promote indigenous sources such as ethanol-blended petrol, he said 47 blocks had been awarded for exploration in the first two rounds of the New Exploration of Licensing Policy (NELP).

Bids for another 23 blocks had been received in August. In comparison to these 70 blocks (onshore, offshore and deep sea) in just three years, only 22 blocks were awarded in the previous 10 years.

The Union Minister said `important discoveries' of oil and gas deposits had been made in deep sea structures off the Ravva oilfields on the East Coast and beyond the Mumbai High on the West.

Besides, the ONGC Videsh Limited had acquired 20 per cent stake in the Sakhalin Oilfields in Russia at a cost of Rs. 8,000 crores and would get 4 to 8 million tonnes of crude from 2005. Huge investments had also been made on exploration in Vietnam and Sudan.

Mr. Naik said that 8,659 retail petrol outlets, constituting 45 per cent of the existing bunks, would be added in the coming years. This was in tune with the Government's decision to give marketing rights to companies investing above Rs. 2,000 crores in petroleum infrastructure. Four companies — Reliance, Essar, ONGC and Numaligarh refinery — had qualified for these rights.

The Union Minister announced that the Government planned to cover 50 per cent of the population with LPG connections within two years against 30 per cent at present. Among the States, Himachal Pradesh tops the list with 71 per cent coverage, followed by Uttaranchal (63 per cent) and Punjab (61 per cent). The coverage in Andhra Pradesh, where the TDP Government launched a scheme for providing free LPG connections to the poor, is 49 per cent. Mr. Naik said he was being unnecessarily branded as an enemy of disinvestment. "Disagreement with the strategic sale (from BPCL and HPCL) on the ground of security, profitability and choice of the party does not mean I am opposed to disinvestments.''

He recalled that oil MNCs such as the Caltex, Burmah Shell and Esso had not cooperated with the Government during the Bangladesh war.

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