News Release Details
Oil Ministry mulls open market sales of kerosene
New Delhi 29-Aug-2007
The Ministry of Petroleum and Natural Gas has proposed open market sales of kerosene and sought tax concessions for this from the Finance Ministry. This could lead to reduction in petroleum subsidy and also ease burden on kerosene sold under the public distribution system. The Union Petroleum Minister, Mr Murli Deora, met the Finance Minister, Mr P. Chidambaram, on Tuesday on the larger issue of Government share of subsidy to compensate the state-owned oil marketing companies (OMCs) for selling petroleum products below the cost price. The Petroleum Ministry gave its proposal to make one litre packet of kerosene available through open market at a market price, According to sources; the Petroleum Ministry has sought tax concessions to make the scheme economically viable. <b>MARKET PRICE</b> Currently, kerosene is available through public distribution system at Rs 9 per litre. In the open market, the custom duty component on kerosene is 10 per cent and excise duty is 16 per cent. This would take the market price between Rs 35-36 per litre, thus making it not very attractive. The Finance Ministry has sought more details on the project from the Petroleum Ministry. <b>OIL BONDS</b> Surge in global crude prices has led to the OMCs suffering revenue loss on sale of petrol, diesel, kerosene, and liquefied petroleum gas (LPG). The Petroleum Ministry has sought from the Finance Ministry oil bonds worth Rs 19,000 crore to partly meet the under-realisation on fuel sale. As on August 16, the desired retail-selling price for petrol stood at Rs 2.80 per litre and for diesel Rs 4.70 per litre. The under recovery on sale of kerosene was at Rs 15.50 per litre and that on cooking gas (LPG) was Rs 178.15 per cylinder. <b>UNDER-RECOVERY</b> The Petroleum Ministry is constantly monitoring the situation and has presented the basic facts including the under realisation suffered by the State-owned oil marketing companies due to selling petroleum products below the cost price to the Finance Ministry. The estimated under recovery for the current financial year stood at Rs 52,000 crore. For the first quarter of current fiscal estimated under recovery on petrol stood at Rs 1,553 crore, and that for diesel stood at Rs 4,633 crore. The under recovery on kerosene stood at Rs 4,028 crore and on cooking gas it was Rs 2,698 crore. The Indian crude basket on Monday stood at $68.03 per barrel up from August 24 figures of $67.97 a barrel. For April to date the Indian basket averaged at $68.30 a barrel
New Delhi 29-Aug-2007
The Ministry of Petroleum and Natural Gas has proposed open market sales of kerosene and sought tax concessions for this from the Finance Ministry. This could lead to reduction in petroleum subsidy and also ease burden on kerosene sold under the public distribution system. The Union Petroleum Minister, Mr Murli Deora, met the Finance Minister, Mr P. Chidambaram, on Tuesday on the larger issue of Government share of subsidy to compensate the state-owned oil marketing companies (OMCs) for selling petroleum products below the cost price. The Petroleum Ministry gave its proposal to make one litre packet of kerosene available through open market at a market price, According to sources; the Petroleum Ministry has sought tax concessions to make the scheme economically viable. <b>MARKET PRICE</b> Currently, kerosene is available through public distribution system at Rs 9 per litre. In the open market, the custom duty component on kerosene is 10 per cent and excise duty is 16 per cent. This would take the market price between Rs 35-36 per litre, thus making it not very attractive. The Finance Ministry has sought more details on the project from the Petroleum Ministry. <b>OIL BONDS</b> Surge in global crude prices has led to the OMCs suffering revenue loss on sale of petrol, diesel, kerosene, and liquefied petroleum gas (LPG). The Petroleum Ministry has sought from the Finance Ministry oil bonds worth Rs 19,000 crore to partly meet the under-realisation on fuel sale. As on August 16, the desired retail-selling price for petrol stood at Rs 2.80 per litre and for diesel Rs 4.70 per litre. The under recovery on sale of kerosene was at Rs 15.50 per litre and that on cooking gas (LPG) was Rs 178.15 per cylinder. <b>UNDER-RECOVERY</b> The Petroleum Ministry is constantly monitoring the situation and has presented the basic facts including the under realisation suffered by the State-owned oil marketing companies due to selling petroleum products below the cost price to the Finance Ministry. The estimated under recovery for the current financial year stood at Rs 52,000 crore. For the first quarter of current fiscal estimated under recovery on petrol stood at Rs 1,553 crore, and that for diesel stood at Rs 4,633 crore. The under recovery on kerosene stood at Rs 4,028 crore and on cooking gas it was Rs 2,698 crore. The Indian crude basket on Monday stood at $68.03 per barrel up from August 24 figures of $67.97 a barrel. For April to date the Indian basket averaged at $68.30 a barrel