The Hindu Business Line : Deora hints at relief for oil cos in Budget

THE bleeding oil marketing companies (OMCs) can expect some relief in the forthcoming Union Budget, with the Petroleum Minister, Mr Murli S. Deora, expecting some changes in the tax structure for the oil sector. The Petroleum Minister said, "I have had a meeting with the Finance Minister, Mr P. Chidambaram, and he is very supportive and sympathetic.''

The Minister had also held discussions with Dr C. Rangaranjan, the head of the inter-ministerial committee to suggest pricing and taxation policy of petroleum products. The committee has been urged to submit its report at the earliest, Mr Deora told newspersons here.

Sources indicated that the Rangarajan Committee report, which is still under preparation, is likely to suggest a complete policy matrix for the petroleum sector and will probably have a caveat that the report in full be implemented to address the issues proposed to committee. This is in variance with what the Left has sought. The Left has said that the report should be open for public debate before any recommendations are accepted.

While stating that the Government was studying various options to restore the financial health of the oil companies, Mr Deora explained that the OMCs - Indian Oil Corporation, Bharat Petroleum Corporation, Hindustan Petroleum Corporation, and IBP - have incurred a cumulative loss of about Rs 2,898 crore during April-December 2005, against a net profit of Rs 5,223 crore during the corresponding period of previous year.

The losses assume greater proportion if the Rs 9,751-crore assistance provided to OMCs by the upstream oil companies, like ONGC is taken into account, the Minister said. Public sector oil companies are losing over Rs 130 per LPG cylinder and about Rs 12 on sale of every litre of kerosene, as input cost has moved up sharply.

In order to protect the mass consumer from the ever-fluctuating international crude prices, the Petroleum Minister said that the Government had no plans to raise the prices of kerosene under public distribution system (PDS) and cooking gas (liquefied petroleum gas). He said that the Government was committed to making available the cooking fuels at affordable price.

Mr Deora also held discussions with the Senior CPM leader Mr Sitaram Yechuri on Tuesday on the issue of pricing of the sensitive petroleum productions — LPG, SKO, diesel, and petrol.