Dashing the hopes of the Oil Marketing Companies (OMCs) and raising fears of another round of hike in the prices of petrol and diesel, Finance Minister Pranab Mukherjee on Monday refused to tinker with the customs and excise duties on petroleum products.
With international crude oil prices touching a new high of $100 a barrel, a petrol and diesel price hike looks imminent. Presenting the budget in Parliament, Mr. Mukherjee ignored calls from the Petroleum Ministry for reduction in customs and excise duty to contain the impact of the spurt in global crude oil prices.
He left the customs duty on crude oil unchanged at five per cent, and that on petrol and diesel untouched at 7.5 per cent. Excise duty on petrol will remain at Rs.14.35 a litre and diesel at Rs.4.60 a litre.
Interestingly, the Minister refrained from mentioning the impact of the rising crude oil prices on an import-dependent economy.
State-owned IOC, BPCL and HPCL are now losing about Rs.2.25 a litre on petrol, a fuel that was freed from government control in June last. The OMCs had withheld raising the prices in anticipation of a cut in customs and excise duty in the budget. They are selling diesel at Rs.10.74 a litre lower than the imported cost.
Besides petrol and diesel, the OMCs are losing Rs.21.60 a litre on PDS kerosene and Rs.356.07 per 14.2-kg domestic LPG cylinder.
Mr. Mukherjee has provisioned only Rs.23,640 crore as oil subsidy, lower than the Rs.38,386 crore of the current fiscal. The budgetary provision for the purpose during 2011-12 will be less than one-fourth of the projected Rs.1,05,000 crore revenue loss that the OMCs anticipate on selling diesel, domestic LPG and kerosene in the next fiscal.
The revenue loss projected for the 2011-12 fiscal is higher than Rs.1,03,292 crore under-recovery in 2008-09 when global crude oil prices had touched $147 a barrel.
Of the Rs.46,963 crore revenue loss due to under-recovery during April-December 2010-11, Rs.21,000 crore has come as cash assistance from the government while another Rs.15,654 crore was provided by upstream firms like the ONGC.
The remaining Rs.10,309 crore has been absorbed by the OMCs.