The Telegraph
Since 1st March, 1999
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Plea to waive duty on kerosene, LPG

New Delhi, Aug. 9: The ministry of petroleum and natural gas has requested the finance ministry to waive the excise duty on LPG and kerosene as the national oil companies are supplying these cooking fuels to consumers at prices that are well below international market rates. A 16 per cent excise duty is currently levied on these two fuels.

The petroleum ministry is of the view that the since the government has decided to pay only a limited amount of subsidy on LPG and kerosene and the oil companies have not raised the price of these politically sensitive commodities, they should be spared the excise duty burden.

The oil companies have informed the petroleum ministry that their “under-recovery” from the sales of LPG and kerosene during the first quarter of the current fiscal had touched the Rs 1500-crore mark.

However, sources disclose that the petroleum ministry does not agree with this figure and has put the burden of the under-recovery at around Rs 500 crore. While the oil companies have made their calculations on the basis of internationally accepted “margins”, the petroleum ministry reckons that the figure has been overstated.

Senior IOC officials say the efficiency of the public sector companies is judged on the basis of their profits which are directly compared with their private sector competitors.

Therefore, all sales must be valued strictly on a commercial basis. However, if the government wants to raise more resources from the public sector companies, it should do it through the simple process of taking a higher dividend.

The complicated route of asking them to bear the burden of the subsidy and pay high excise duties as well tends to mask the true performance of the public sector oil firms. The finance ministry, on its part, appears to be aware of the fact that the oil firms are making good profits and would not like to let go of such easy revenue pickings by way of excise duty.

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