Chidambaram also said his government has effected the biggest reduction in taxes on petroleum products.Besides, he indicated that no duty cuts were on the cards.
Govt still struggling to tackle the situation
NEW DELHI: If consumers thought that petroleum minister Murli Deora’s statement that a decision on tackling the petroleum price issue would be taken this week may lead to a price hike or duty cuts, then be assured nothing of that sort is likely to happen immediately.
At least that is what appeared on Monday after Finance Minister P Chidambaram told media that no decision has been taken as yet and the government was still struggling with the ways of tackling the situation.
Chidambaram also said his government has effected the biggest reduction in taxes on petroleum products so far.
Besides, he indicated that no duty cuts were on the cards.
The conflicting indications from the government is not merely a reflection of the usual disagreements between the ministries of finance and petroleum but also signals to the fact that the Centre is not perturbed and is not in a hurry.
With international crude oil prices threatening to touch $100 a barrel any time now, the Indian basket of crude is hovering around $89 after it touched an all time high of $91.12 on November 7.
Interestingly, the current year (April 2007 onwards) average though high at around $71.57 is still within the manageable limits after the government worked out a compensation package for the sector last month.
“The package was worked out at $70 a barrel,” said an official in the ministry of petroleum and natural gas.
On the face of it, the oil companies will be making additional losses only on the additional $1.5 a barrel and this explains the government’s cautious approach.
The average may increase at the end of financial year in March 2008 but it may also decrease like last year when international crude oil prices eased in winters.
The official in petroleum ministry added that because of the support from the government the biggest oil marketing company, Indian Oil Corporation, has shown highest quarterly profit of Rs 3,817 crore for June-September 2007 in the last four quarters.
The high profit was due to the fact that the company got bonds for two quarters in the second quarter and also gained in refining margins.
Refining margin is broadly the difference between trade parity price charged at the refinery gate and the cost of making petroleum products.
The trade parity price, as per the government’s declared policy, is the price at which calculations of losses are made and is loosely the price at which the products when imported will cost.
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