Petroleum Minister Murli Deroa has asked Prime Minister Manmohan Singh to cut customs duty on crude oil to avert financial bankruptcy of public sector oil companies who face a whopping Rs 130,000 crore (Rs 1,300 billion) revenue loss on sale of fuel in current fiscal.
With crude oil prices hovering over $100 a barrel mark, Deora had a s-o-s meeting with prime minister on Wednesday evening to seek his intervention in protecting the fuel retailers -- Indian Oil, Bharat Petroleum and Hindustan Petroleum -- from bankruptcy.
"Just like the government scrapped import duty on edible crude oil (in the meeting of Cabinet Committee on Prices on April 1), 5 per cent customs duty on petroleum crude oil should also be made nil," Deora told reporters.
IOC, BPCL and HPCL, who together lost Rs 77,304.50 crore (Rs 773.04 billion) on sale of petrol, diesel, domestic LPG and kerosene in 2007-08, are projected to lose Rs 130,000 crore in current fiscal.
"Oil bonds being given by the government are not enough," he said. During April-December period, the Government gave oil bonds worth Rs 20,333.33 crore (Rs 203.33 billion) and another Rs 12,675 crore (Rs 126.75 billion) bonds are expected for January-March period. After considering subsidy contribution from companies like ONGC and GAIL, a gap of over Rs 12,000 crore (Rs 120 billion) still remained uncovered.
Deora asked prime minister to raise the quantum of oil bonds after Singh is believed to have rejected the idea of nil customs duty on petroleum crude oil.
The oil PSUs currently lose about Rs 450 crore (Rs 4.5 billion) every day on fuel sales as they have not been allowed to pass on the increase in cost of raw material to the consumers. They lose Rs 10.78 a litre on petrol, Rs 17.02 on diesel, Rs 316.06 per LPG cylinder and Rs 25.23 a litre on kerosene.