New Delhi: Petroleum Minister Murli Deroa has asked Prime Minister Manmohan Singh to cut customs duty on crude oil to avert financial bankruptcy of public sector oil companies who face a whopping Rs130,000 crore revenue loss on sale of fuel in current fiscal.
With crude oil prices hovering over $100 a barrel mark, Deora had a meeting with Prime Minister on Wednesday evening to seek his intervention in protecting the fuel retailers -- Indian Oil, Bharat Petroleum and Hindustan Petroleum -- from bankruptcy.
“Just like the government scrapped import duty on edible crude oil (in the meeting of Cabinet Committee on Prices on April 1), 5% customs duty on petroleum crude oil should also be made nil,” Deora told reporters here.
IOC, BPCL and HPCL, who together lost Rs77,304.50 crore on sale of petrol, diesel, domestic LPG and kerosene in 2007-08, are projected to lose Rs130,000 crore in current fiscal.
“Oil bonds being given by the government are not enough,” he said.
During April-December period, the government gave oil bonds worth Rs20,333.33 crore and another Rs12,675 crore bonds are expected for January-March period. After considering subsidy contribution from companies like ONGC and GAIL, a gap of over Rs12,000 crore still remained uncovered.
Deora asked Prime Minister to raise the quantum of oil bonds after Singh is believed to have rejected the idea of nil customs duty on petroleum crude oil.
The oil PSUs currently lose about Rs450 crore every day on fuel sales as they have not been allowed to pass on the increase in cost of raw material to the consumers. They lose Rs10.78 a litre on petrol, Rs17.02 on diesel, Rs316.06 per LPG cylinder and Rs25.23 a litre on kerosene.
Deora said the 5% customs duty on crude oil has yielded more revenues to the government since the rate was fixed when crude was at $32 per barrel.
In April-December 2007-08 fiscal, the government got Rs7804 crore in customs revenue from crude oil. In 2006-07 full year, customs duty on crude oil gave Rs10,043 crore.
“Of the Rs45.52 a litre price of petrol in Delhi, only Rs22.02 per litre goes to oil companies and the rest is all duties. Similarly, taxes and duties make 32% of the diesel selling price of Rs31.76 per litre,” he said.
A cut in customs duty on crude oil would reduce the raw material cost of oil companies, thereby cushioning them from the spike in international oil prices.
The Indian basket of crude oil averaged $99.76 per barrel in March.