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Govt unlikely to accept Chaturvedi panel report in totality

Govt unlikely to accept Chaturvedi panel report in totality
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First Published: Wed, Aug 13 2008. 01 49 PM IST
Updated: Wed, Aug 13 2008. 01 49 PM IST
New Delhi: In clear indications that the government may dump suggestions of a monthly fuel price hike, Petroleum Minister Murli Deora today said not all of the BK Chaturvedi Committee recommendations were implementable.
“I am told some recommendations of the Committee can be implemented (while some others) could be difficult to implement,” Deora said.
The high-powered BK Chaturvedi Committee has recommended raising prices of petrol by Rs2.50 a litre per month till March 2009 and those of diesel by Rs0.75 per litre till 2010 to eliminate subsidies on the two fuels.
It has also suggested temporary duty changes and the method of calculating retail selling price of fuel.
“I have called a meeting of oil PSU chiefs on 19 August to discuss threadbare the recommendations,” Deora said.
New levies
The three-member panel, headed by Planning Commission member B K Chaturvedi that was asked by the Prime Minister to go into the financial position of oil firms, has also proposed levying a ‘Metro Extra´ tax of Rs2 per litre on diesel in four instalments in large cities where the fuel was being used in expensive cars.
“I had some discussions on the recommendations yesterday, but we need to do a thorough analysis before we arrive at any decision,” Deora said.
“The recommendations are being studied and are under consideration of the government,” he noted.
While the government may reject a call for monthly hike in fuel prices, it may accept suggestions for pricing domestic fuel at export parity rates.
The panel sought to lower the benchmark used for domestic retail pricing by 10-15% by shifting away from the current principle of trade parity pricing.
The government is finding it difficult to implement the report in totality as inflation is already at a 13-year high at 12.01%.
Export parity rates or the price that refiners would fetch if the fuel were to be exported, would be 10-15% lower than the trade parity pricing followed now, thereby bringing down the projected revenue losses.
Domestic retail price is currently determined in an 80:20 mix of import-parity and export-parity prices.
LPG distribution
The Committee, besides suggesting freeing auto fuel pricing from government control, also recommended changes in distribution of domestic LPG by restricting only six refills per connection a year.
It also proposed a slash on import duty on petrol and diesel to zero (from 2.5%) as has been done in the case of crude oil, domestic kerosene andested to be reduced from Rs13.75 per litre to Rs10.
The panel also favoured imposing a new tax on oil produced from fields awarded prior to the advent of New Exploration Licensing Policy (NELP) in 1999 — state-run firms like ONGC would be stripped of any gains above $75 a barrel while private companies like Cairn would be taxed at 40% for gains over this benchmark rate.
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First Published: Wed, Aug 13 2008. 01 49 PM IST