Aiyar to meet PM on oil prices

According to sources in the petroleum ministry, Aiyar discussed the issue with Left parties on Friday. It is learnt they have softened their stand in view of the adverse impact of the failure to raise prices on the bottomlines of oil majors.

However, they requested Aiyar to recommend a reduction in customs duty on crude oil so that effect of the increase may not be passed on to the consumers.

However, Aiyar said, the government was not ready to tinker with the existing customs duty structure till the next Budget or till the time the expert committee headed by Ashok Lahiri sumbits its report on the issue.

Aiyar said the finance ministry has already made two consecutive reductions in customs and excise duties during the last two months and the government estimates a revenue loss of about Rs 5,000 crore in excise duty collections this fiscal.

However, this has been compensated to some extent by an increase in customs duty collections due to a hike in crude oil prices in the international market.

According to finance ministry estimates, customs duty collections are almost 45 per cent more than total excise revenues collected.

The option of revision of LPG and kerosene prices is also being explored, as oil marketing companies (OMC) have been facing huge under-recoveries amounting to almost Rs 13,250 crore on these two commodities and the oil companies have lost Rs 4,992 crore on LPG and kerosene in the April-September 2004 period.

Oil marketing companies have till date lost Rs 2,273 crore on selling petrol and diesel below international prices this fiscal.

Oil companies have demanded a Rs 1.60 per litre increase in diesel price and Rs 0.65 per litre hike in petrol prices in step with the surge in international oil prices.