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The government is looking at reviewing the imposition of cesses and duties on fuel and domestic crude in a meeting to be held Friday, officials said. Officials of petroleum and finance ministries will attend the meeting to review the levies which came into effect on July 1.
With global crude prices having softened since the imposition of the levies on July 1, it is likely that the government may consider lowering the duties and cesses.
“A meeting will be held tomorrow (Friday) to review the duties and cess on petrol, diesel and crude. The decision will take into account the situation of global crude oil prices,” an official said.
With an aim to address the issue of fuel shortage in the country, the Centre had on July 1 imposed special additional excise duty on export of petrol and diesel. Cesses equal to Rs 6 per litre on petrol and Rs 13 per litre on diesel were imposed on their exports.The government had also levied a cess of Rs 23,250 per tonne (by way of special additional excise duty) or windfall tax on domestic crude being sold to domestic refineries at international parity prices. These measures are expected to yield revenue of around Rs 15,000 crore.
The Finance Ministry did not give a timeline for continuation of the levy, but had said it will assess the situation every 15 days to review the impact of these changes.
Starting June, fuel pumps across India have been reporting fuel shortage, leading to the closure of many of them. The situation of fuel shortage at pumps peaked in the middle of June, resulting in the government issuing a statement on the matter. The statement assured of enough fuel available in the country and asked oil marketing companies to ensure their fuel pumps remain open.
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As global crude prices rose, domestic crude producers were making windfall gains. Private oil marketing companies (OMCs) were exporting petrol and diesel to foreign countries like Australia for better realisation. The shortage of fuel at retail outlets was because OMCs were not willing to sell fuel at a loss since fuel prices have not increased despite rising crude and depreciating rupee: these two factors had led to OMCs losing Rs 20-25 per litre on diesel and Rs 10-15 per litre on petrol.
Over the last fortnight, the benchmark contract of Brent on the Intercontinental Exchange has fallen by over 12 per cent to around $97.5 per barrel on fears of a recession in the US and concerns about fuel demand pick-up in China due to Covid-related restrictions in some areas.
