India to give concession to oil firms
NEW DELHI, Feb. 19 (UPI) — India says it may give concessions to oil marketing companies by reducing duty on diesel and petrol in the upcoming federal budget.
“The government is weighing the possibility of reducing customs duty on petrol and diesel to 5 percent from 7.5 percent,” a Finance Ministry spokesman said.
It is also planning to cut excise duty to 6 percent from 8 percent. It said the specific excise duty would remain unchanged. The reduction in petrol and diesel prices by 43 cents and 22 cents in mid-February resulted in an under-recovery of 44 cents per liter of diesel for oil companies and the 43 cents per liter profit they were making was neutralized, The Business Line newspaper reported Monday.
“A reduction in customs duty on petrol and diesel would bring petrol and diesel at par with crude oil as it also suffers 5 percent import duty. This would also bring down the effective protection the refineries are enjoying because the landed cost of the petrol and diesel would fall,” said an Indian Oil Corp. spokesman.
Besides, the amount of bonds that need to be issued has also dropped with prices of crude being lowered by $10 a barrel.
“The reduction in the duty would benefit the gross refining margins and integrated refining and marketing companies like Indian Oil, Bharat Petroleum and Hindustan Petroleum would be compensated by an increase in marketing margins, but the stand-alone refining companies like Chennai Petroleum, Kochi Refineries, Mangalore Refinery and Petrochemical Ltd. would suffer for not having the benefit of marketing margins,” the spokesman said.
