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NEW DELHI, May 17

PETROLEUM refiners feel that the urea industry's proposed tender to directly import naphtha is aimed at further squeezing their margins on sales of naphtha.

"They know that we are exporting naphtha at a loss, while their purchases result in a modest profit for us,'' according to a senior oil company official, who pointed out that some fertilser companies had only recently sought prospective price quotes for imported naphtha through MMTC Ltd and Adani Exports.

"If they import directly, they would not have to pay the huge sales tax on naphtha which ranges from 20 to 25 per cent in different States. Although under the present regime, sales tax is passed through in the form of higher urea retention price, there is fiscal pressure on individual units to prune costs. In such a case, they would stand to gain by importing on their own account and thereby save on sales tax,'' the official added.

The urea industry accounts for around 35 per cent of total naphtha consumption in the country.

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