New Delhi: The B.K. Chaturvedi panel’s suggestion of raising fuel prices to bring them on a par with production cost and levying a super profit tax on oilfields awarded before 1999, has met with lukewarm response with some in the government saying the measures cannot be implemented.
The committee, which was appointed by the Prime Minister in early June to look into the financial health of public sector oil companies, suggested raising petrol and diesel prices every month till they come on a par with production cost. It also favoured subsidizing cooking fuels—liquefied petroleum gas, or LPG, and kerosene—through a new tax on oil produced from fields awarded prior to the advent of the New Exploration Licensing Policy (Nelp) in 1999.
When contacted, petroleum minister Murli Deora said: “We are studying the report and it will be premature to presume that the reported suggestions made by the committee were being implemented. We have to do a thorough analysis before we even think of implementing them.”
He refused to divulge the contents of the report.
Another minister, who asked not to be named, said raising fuel prices every month is unthinkable when inflation has crossed 12% and elections are just nine months away.
Even the suggestion of capping price for crude oil produced from fields awarded prior to 1999 at $75 (Rs3,165 at current exchange rate) a barrel and taxing the price above it was a “radical” measure that would impact investor confidence. “Nobody is ready to buy these suggestions,” he said. Some ideas are so revolutionary one wonders why did Chaturvedi, who prior to his posting in the Planning Commission was the cabinet secretary and before that the petroleum secretary, took so much time to think of them, he said.
Deora, on his part, warned his ministry officials from jumping to conclusion that the recommendations will be accepted by the government and implemented.
“Officers of (my) ministry should wait before they go to press. We need to study the report carefully and its implications before we jump to any conclusion.”