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Cess on diesel cars on anvil

Vehicles lined up to fill diesel at a gas station

NEW DELHI: Concerned over the unprecedented spurt in demand for diesel, the Union Petroleum and Natural Gas Ministry is formulating a proposal for imposing 25-30 per cent cess on luxurious diesel cars. The proposals also talk of charging bulk users other than Railways and State transport corporations Rs. 57 a litre more for the supply of diesel.

Union Petroleum and Natural Gas Minister, Murli Deora, had acknowledged that the Government was working on the dual pricing policy for diesel but stated that it was a bit difficult to implement. However, officials associated with the development stated that various options were being worked out and as it would be difficult to implement such a proposal at the retail petrol outlets, one option was to impose a heavy cess on luxurious diesel vehicles which used subsidised diesel. Similarly, diesel to industrial users other than Railways and STCs was proposed to be sold at a market price of Rs. 57 a litre, Rs. 22 higher than the present price. Industrial units such as power generators in IT industry find subsidised diesel cheaper than freely priced fuel oil and naphtha, pushing demand that has forced refiners import the fuel to meet the requirement.

The Petroleum Ministry, including the Petroleum Secretary, R. S. Pande, is holding talks with various stakeholders to find out a viable option that is acceptable to all and only after that some concrete proposal would be formed for putting it up before the Union Cabinet, sources said. Officials said charging bulk user’s higher price would reduce loss of oil marketing companies by Rs. 14,000-15,000 crore.

Demand for diesel in April-July had grown by 18 per cent, with bulk of the growth coming from industrial users such as power plants. The power sector had seen a huge 152 per cent rise in demand in the first quarter to 53,000 tonnes, while the fisheries and marine sector had seen a near-40 per cent growth.

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