Ajay Modi & Jyoti Mukul / New Delhi Jan 16, 2010, 00:32 IST
Oil and Natural Gas Corporation (ONGC) is in favour of full market price parity for retail sales of petrol and partial burden sharing by consumers of diesel, LPG and kerosene. The company has also suggested a formula for sharing the burden of an increase in crude oil prices beyond $60 a barrel.
Being a producer of crude oil, ONGC would normally gain from the spurt in crude oil prices but it does not get the complete upside since it is forced to bear a portion of the subsidy on sale of cooking and auto fuels. Chairman and Managing Director R S Sharma told Business Standard the company’s presentation to the Kirit Parikh committee on oil prices had suggested the entire subsidy mechanism be set right, based on prevailing crude oil prices. The Parikh report is expected shortly.
Stating there was no need to subsidise petrol prices, Sharma said: “We have submitted that a matrix needs to be developed, starting from the $60-price level. At these levels, what should be the pricing of consumer products linking with the international parity? Let the government consciously decide which product needs to be subsidised, to what extent.”
As an example, he said, consumers can share half the price increase in diesel, with the remaining amount to be absorbed by the system. Similarly, at least 20 per cent of the price increase for LPG should be borne by the consumer, and the rest by the government. “Since kerosene is sensitive, the government or the system can bear 90 per cent of the increase but at least 10 per cent of increase should be passed on, so that everybody feels the pinch,” he said. Adding that these numbers could vary, based on the decision taken by the government.
The company has also suggested that the upstream companies (ONGC, Oil India, GAIL, all producers) could share under-recoveries from an additional cess which may be levied beyond a certain level of crude prices (say at $60 a barrel). “We are willing to bear higher subsidy discounts as the crude prices move up in a calibrated formula. Instead of ad hoc discounts, our share can be taken as windfall tax or as a special cess and that corpus should be used to compensate the under-recovery of the downstream companies,” Sharma said.
The ad hoc discounts given by ONGC to downstream companies are questioned by state governments and they insist ONGC should pay royalty on the full price of crude. This issue can be addressed through a notified decision of the government, he said.
Who is subsidising anything at all? It is our own money. Get that clearly in your heads please.... The IT department has no way of making everyone to pay their dutiful taxes. So we have a system where 10% of the citizens (taxpayers) subsidising diesel spent by the remaining 90% or the populace. It is a great system, if you are among the 90%!!! Let everything be deregulated... Then the rich can buy at a premium or do away with the luxury!! That way, the poor can become rich and vice versa. But does not go well with the Government does it? So many ministers, secretaries and PSU staff will be forced to seek a job where they actually have to "do work"!! So the Govt floats the concept of "subsidised" petrol. Please don't buy the lie.. Go ahead, be bold and ask for a complete deregularisation. And also ask them to cut sales tax now that "they" don't have to bear the "burden"!! Same goes for LPG. What we don't have, how can we spend? Oil is a precious commodity. Preserve it.
Do not shake the chair of PM by asking GOI to abolish petrol subsidy as petrol is 15 rs per litrecostlier than US.Give cooking lpg subsidy to rich. Kill the petroleum sector due to the same. Burn dollars and environment with subsidized lpg and sub bislery priced kerosene. Let 120000 crore black market boom due to gross lpg and kerosene subsidy. At the same time give 100% depreciation, complete tax exemption in production, sells, promotion, transport etc and some property tax exemption on the use of solar cookers, solar water heaters, solar dryers and solar skylight systems. According to my calculations above mentioned equipment give energy at 15 times and two times less cost than unsubsidized lpg and subsidized kerosene respectively on 200 to 300 sunny days a year.ALOK GWALIOR
petrol price in US with more petroleum products import component than in india is rs 35 per liter than how it is subsidizes at rs 50 in this poorest country of the world.
petron is not subsidized but it is heavily taxed.ONGC knows it well but cant utter words against GOI.It costs only rs 35 per litre in US and oilcos are not in loss.LPG IS highly subsidized and kerosene is sold free.now populist govts cant do any thing.
Actually the government is not giving anything subsidy to common man but those who receive subsidy is CEOs,executives, if you stop these, common man will be benefitted
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