The Telegraph
Since 1st March, 1999
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Contingency plan for crude ready

New Delhi, March 7: Petroleum minister Ram Naik said today that a contingency plan had been drawn up to pick up crude from countries that do not fall in the war zone in the event of a US attack on Iraq.

The minister said that there would be no disruption in the supply of petroleum products in case of a war in Iraq. Arrangements have already been made for sourcing crude from oil producing countries that do not fall in the war zone, he added.

He said that there were enough stocks of petroleum products to last the country for two months in case of an emergency. All the tankage has been topped and there is nothing to worry about on this front, he added.

He, however, expressed serious concern over the rising global crude prices triggered by fears of a possible war in Iraq. The minister lamented that international prices of crude had gone up from $ 20 per barrel in February last year to the current $ 37 per barrel largely because of the war scare.

Naik said the public sector oil companies decided to bear part of the increased price burden and had passed on only part of it to consumers in the recent increase in petrol and diesel prices.

The minister fobbed off queries about whether the oil companies would be allowed to go in for an increase in LPG and kerosene prices due to soaring international prices and the increasing subsidy burden. In fact, the government has not been able to pay the entire subsidy to the oil majors and they have been forced to shoulder this burden.

While the oil companies have approached the government for an increase in prices, they have not been allowed to do so as it would have a negative political fallout at a time when several states were going to the polls.

Naik said he had written to all the state governments to reduce the sales tax on petroleum products to 4 per cent. At present some states impose taxes that are as high 22 per cent. He said that if the states went in for a uniform 4 per cent sales tax it should make it easier for the oil companies to hold the price line for petro goods.

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