We are using extra tax from fuel to develop infra: Dharmendra Pradhan

At the Mint Energy Conclave Dharmendra Pradhan says that clean energy could be slightly more expensive but in any case, the poor will be protected by way of subsidies


Dharmendra Pradhan. Photo: Pradeep Gaur/Mint
Dharmendra Pradhan. Photo: Pradeep Gaur/Mint

Oil minister Dharmendra Pradhan said the government was utilizing the extra tax receipts mobilized from the sale of petrol and diesel for infrastructure development and that some of the increases in excise duty is likely to be reversed if crude oil prices were to go up.

Addressing industry leaders at the Mint Energy Conclave on Wednesday, Pradhan said that the government has not let state-run fuel retailers pass on the full benefit of the low international crude oil prices to consumers by increasing taxes to generate resources for infrastructure spending.

“Half the benefit of low fuel were passed on to consumers while we retained the other half to calibrate fuel consumption and to save some resources for investing in social infrastructure. At an appropriate time, the government may reduce (excise duty) if global fuel prices move up,” said Pradhan.

The Union cabinet on 21 September decided to invest Rs5,176 crore in the Jagdishpur-Haldia pipeline project of GAIL (India) Ltd to help the state-run natural gas transporter execute the Rs12,000 crore project.

“We have 21 million tonnes of liquified natural gas (LNG) import capacity. We are adding to that as well. Clean energy is not just clean fuel, it is a new economy, a new business model,” said Pradhan.

The absorption of gas in the economy was a function of having a robust pipeline infrastructure, said Kalpana Jain, senior director of Deloitte in India.

“There needs to be a nexus between project developers, whether government or private, and land owners, and get all the stakeholders a return on their assets to address any difficulty in land acquisition,” said Jain.

Pradhan admitted that clean energy could be slightly more expensive but in any case, the poor will be protected by way of subsidies. “The wealthy sections of the economy should be willing to pay a bit more to get clean energy. Subsidy should be meant for the needy people,” the minister said. Gas, which is abundantly available in countries like the US, becomes expensive when imported to India because of the transportation and processing cost.

Processing urban and farm-waste is another priority for the government as its cleanliness drive does not end with just a clean neighbourhood, but extends to generating energy from the waste, he said.

To encourage research in this area, Pradhan has advised state-owned companies like Indian Oil Corp. and GAIL to set up a start-up fund which will facilitate scaling up of waste-to-energy projects.

Komal Gupta contributed to this story.

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