25% cess on big diesel cars likely

Government may impose a 25 per cent cess on big diesel cars and charge bulk users other than railways and state transport corporations Rs 22 a litre more for diesel as part of a dual fuel pricing policy.     

"Big car owners do not deserve subsidised diesel. We want them to pay market price but it will be difficult to ask petrol pumps to charge them higher than other vehicles. So it is being debated if a 25 per cent cess on the car price may be imposed on big cars," a top Petroleum Ministry official said.     

This is part of a dual diesel pricing proposal the ministry is preparing for the Cabinet, he said. "Diesel to industrial users other than railways and state transport departments will be sold at market price of Rs 57 a litre."     

At present, diesel in Delhi costs Rs 34.86 a litre.     

Industrial units like power generators in IT industry find subsidised diesel cheaper than freely priced fuel oil and naphtha, pushing demand that has forced refiners import the fuel to meet the requirement.     

"The idea is to limit sale of subsidised diesel to transport and agriculture sectors only," he said, adding the Petroleum Ministry was holding consultations with various stakeholders and will move a Cabinet note this month.     

While the cess on big diesel cars would give about Rs 150 crore additional revenues annually, charging bulk users higher price would reduce loss of state retailers Indian Oil, Bharat Petroleum and Hindustan Petroleum by Rs 14,000-15,000 crore.     

"More than half of the projected Rs 1,65,300 crore revenue loss on sale of petrol, diesel, domestic LPG and kerosene this fiscal is on account of diesel sales," the official said.     

Diesel demand in April-July had grown by 18 per cent, with bulk of the growth coming from industrial users like power plants.