Agencies
New Delhi, May 27:
Acess or surcharge on income tax and corporate tax may be levied to bail out oil firms reeling under high global oil prices as Petroleum Ministry's proposal to raise petrol price by Rs 10 a litre, diesel by Rs 5 per litre and that of LPG by Rs 50 per cylinder finds few takers.
The new proposal follows Finance Minister P Chidambaram's reluctance to cut duties on crude oil and petroleum products unless alternate source of revenues are identified.
Petroleum Minister Murli Deora met Chidambaram today but failed to convince him of the urgency to cut import and excise duties to avoid the Rs 2,00,000 crore revenue loss expected on petrol, diesel, domestic LPG and kerosene this fiscal.
BPCL and HPCL have cash to buy crude oil only till July while Indian Oil can finance imports till September. The three firms face huge liquidity crisis as they are unable to realise full value of products sold.
"We don't want to see scarcity of petroleum products particularly kerosene and LPG," Deora told reporters after the meeting. "Oil companies are in a precarious state and we need urgently find solutions."
Deora said some proposals were discussed but "nothing has been agreed."
Sources said a cess or surcharge like the one levied after the Kargil war, may be imposed on income and corporate tax to make up for the cut in customs duty on crude oil to zero from 5 per cent and an excise duty cut on petrol and diesel.
Petroleum Ministry is proposing to raise petrol price by Rs 10 a litre, diesel by Rs 5 per litre and that of LPG by Rs 50 per cylinder cut the Rs 580 crore per day loss made by the three oil firms by one-third.
S Sundereshan, Additional Secretary in Petroleum Ministry said oil companies cannot wait for another week for the decision.
"We are hopeful that a decision will be taken soon," he said. "The crisis needs to be defused at the earliest."
Deora said some in the government want petrol prices to be deregulated, a move that may see rates being hiked by Rs 16-17 a litre, but continue subsidies on diesel.
Petrol contributes has negligible weightage in inflation and so its deregulated prices moving in tandem with global prices will not lead to price hike. Diesel, on the other hand, is used by transport industry and replicating the same for the fuel would have cascading effect on inflation.
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