Though a second revision of prices of petroleum products appears inevitable, the petroleum ministry is busy examining alternative options to bridge the widening oil pool deficit, projected at around Rs 16,000 crore for fiscal 1996-97.
The prime concern of the ministry is to contain the deficit but we are not interested in hiking prices. The petroleum sector seeks relief from the finance ministry, petroleum minister T R Baalu said in an interview.
He said the customs duties on import of crude should be abolished. Abolition of customs duties would result in a saving of over Rs 4,500 crore to the petroleum industry, he said adding that a similar abolition of excise levies on petroleum products would yield over Rs 6,900 crore.
Baalu pointed out that the finance ministry had got a windfall of an additional Rs 4,200 crore through customs duties following the sudden escalation in the international prices of crude during 1996-97. The situation is so paradoxical that while the finance ministry had gained, the petroleum ministry had lost in the bargain.
The oil economy budget was prepared on the assumption that the international prices of crude would be around $17 a barrel. But prices have shot up to $24 per barrel.