The government may reduce petrol and diesel prices if the current fall in international oil prices continues and crude declines below $50 a barrel level, petroleum secretary M S Srinivasan said on Tuesday.
"The fall in international crude prices is of much relief to us. We are closely monitoring the emerging scenario. . . certainly, we will consider a revision if prices fall further," he told reporters in New Delhi.
In November, petrol and diesel prices were cut by Rs 2 and Re 1 a litre, respectively, when the basket of crude that Indian refiners buy was at $56.8 per barrel. The Indian basket has since fallen to just under $53 per barrel, the lowest this fiscal.
"There may be a scope for a cut in petrol and diesel prices if the Indian basket falls below $50 per barrel," Srinivasan said.
State-run oil companies are currently incurring a loss of Rs 0.22 per litre on petrol and Rs 1.42 a litre on diesel, he said. Kerosene is being sold at a loss of Rs 13-14 per litre and domestic LPG at a loss of Rs 50 per cylinder.
Indian Oil, Bharat Petroleum, Hindustan Petroleum and IBP together are losing about Rs 100 crore (Rs 1 billion) a day on fuel sales. In the first half of 2006-07, the under-realisation on sale of petrol, diesel, LPG and kerosene was Rs 33,200 crore (Rs 332 billion).
Separately, an oil ministry official said the ministry was seeking a shift to specific duties on fuel from the current mix of ad-valorem and specific duties.
The current excise duty on petrol is 8.16 per cent of ex-factory price plus Rs 13.26 a litre, while for diesel it is 8.16 per cent plus Rs 3.32 a litre. The ministry has suggested a specific duty of Rs 15.92 for petrol and Rs 6.08 per litre for diesel in the forthcoming Budget.
The official said that the ministry had also proposed inclusion diesel in the list of 'declared goods.' This would mean that the fuel attracts a uniform state sales tax rate of four per cent instead of present dispensation of rates as high as 29 per cent.
In the last Budget, the finance minister had included LPG in the list of 'declared goods.'
The ministry also wanted the Rs 2,500 per ton cess collected on domestic crude oil to be used for funding the subsidy on PDS kerosene and domestic LPG.
While an amount of Rs 5,000 crore (Rs 50 billion) is collected as cess every year - with cumulative collection of over Rs 61,000 crore (Rs 610 billion) until 2005-06 - only Rs 902 crore (Rs 9.02 billion) has been made available for use of the oil industry, the official said.
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