Govts, oil firms dodge fuel price absorption

NEW DELHI: Consumers are unlikely to get relief from high petrol and diesel prices any sooner, as the Central and state governments and oil companies refuse to absorb rising crude oil price, which stood at $75 per barrel on Tuesday.The Finance Ministry, which has already refused to cut excise duty on account of tight fiscal situation, had asked the oil companies to absorb the price rise. However, oil firms have refused to absorb the burden, fearing that it will dent their profit.

“Finance Ministry is not ready to reduce the duty, which naturally will upset the fiscal targets. But even oil companies are not ready to absorb the price hike. Both are firm on their stand. So, till they reach any agreement, customers have to bear the burden,” a senior official from the ministry told TNIE.Even the state governments, which are already ripped off their revenue after the launch of GST, have refused to buckle under the pressure to reduce VAT on petrol and diesel.

Since October 2017, just four states — Maharashtra, Gujarat, Madhya Pradesh and Himachal Pradesh — have cut VAT on petrol and diesel, that too, before February. Gujarat and Himachal Pradesh had seen elections then.Retail selling price of petrol and diesel depends on global crude oil price and other factors including excise duty, VAT, BS-IV premium, marketing cost and margins, and dealers’ commission.

Consumers continue to suffer as petrol and diesel prices were hiked for the sixth consecutive day across Delhi, Mumbai, Kolkata and Chennai on Tuesday. Petrol retailed at `74.63 per litre in Delhi, `77.32 in Kolkata, `82.48 in Mumbai and `77.43 in Chennai, according to information available on Indian Oil Corporation’s (IOC) website. Similarly, diesel prices were pegged at `65.93 per litre in Delhi, `68.63 in Kolkata, `70.20 in Mumbai and `69.56 in Chennai, according to IOC, the country’s largest fuel retailer.

“Duty cut is not advisable considering the fiscal discipline. Anyways, crude import bill and subsidy on LPG will put a pressure on the finances if oil prices go further. Only political considerations will change the stand,” the official said.They pointed out that every rupee cut from excise on fuel will result in a loss of `13,000 crore to the government. “Fiscal considerations are far higher than one or two rupee price impact on consumers,” said officials.