Mumbai, March 23: Cairn India has protested against a proposal in the Union budget to increase the cess on crude oil to Rs 4,500 per tonne, arguing that it has been singled out for the imposition of the discriminatory levy.

In his budget, finance minister Pranab Mukherjee had raised the cess from Rs 2,500 per tonne to Rs 4,500 per tonne as a measure of “indexation”.

Cairn India claims that it will be the only private sector exploration firm to shoulder the new burden.

Highly placed sources in Delhi said the cess applied to oil blocks that were awarded before the New Exploration Licensing Policy (Nelp) came into effect in 1999. The company claimed that other concessionaires who had won pre-Nelp blocks were paying a cess at the rate of Rs 900 per tonne under the terms of their production sharing contracts.

The cess is not applicable to bidders who were awarded blocks under the Nelp regime.

It is learnt that Cairn, in a letter to oil minister Jaipal Reddy, has assessed the impact of the cess on its revenues at around $2.5 billion and said this would not be quantifiable going forward. In the letter, Cairn sought the oil ministry’s support in making a case to the North Block for a rollback.

Cairn officials did not wish to comment on the letter.

ONGC burden

ONGC, too, said that the budget cess would impact its profits by Rs 4,500 crore. Stating this in Delhi at the Asia gas summit, ONGC chief Sudhir Vasudeva said the Centre should adjust the cess with the subsidy it bore on fuel sales.