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Excise duty cut on petrol mixed with ethanol

New Delhi, Oct. 24: The government, in its effort to speed up consumption of petrol-ethanol fuel mixture (5 per cent ethanol in a litre of petrol), has decided to cut excise duty by 75 paise per litre.

The reduction in excise duty was supposed to be announced early in the current financial year. Sources say the government will soon issue a notification to this effect.

The ethanol-blended fuel will be available from January 1 in Andhra Pradesh, Gujarat, Haryana, Karnataka, Maharashtra, Punjab, Tamil Nadu, Uttar Pradesh and Goa, apart from union territories of Daman & Diu, Dadra & Nagar Haveli, Chandigarh and Pondicherry.

The move follows Wednesday’s meeting between Singh and petroleum minister Ram Naik, where the latter made a case for a quick notification in view of Prime Minister Atal Bihari Vajpayee’s emphasis on the use of ethanol-doped petrol throughout the country.

Blending of 5 per cent ethanol in petrol will not be treated as manufacturing activity and excise concession extended to the doped transport fuel, sources said.

A committee comprising finance secretary S. Narayan, petroleum secretary B. K. Chaturvedi and finance ministry advisor Vijay Kelkar has been constituted to assess the impact of subsidies on domestic cooking gas (LPG) and kerosene on the fiscal position. It will also estimate the deficit arising from the reduction in the excise duty on petrol to cushion the impact of rising crude oil prices on retail pump prices.

Naik has suggested that excise duty be cut on LPG and kerosene immediately to avoid a rise of Rs 45 per cylinder and Rs 1.50-2 per litre hike in kerosene prices.

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