Biodiesel producers agree to cut price, OMCs find it too high

Oil marketing companies (OMCs) want a price cut of as much as Rs 8 in the procurement price of biodiesel from the producers, who, however, do not agree to this idea.

An executive from state-run Indian Oil Corporation (IOC) told Business Standard that the OMCs were ready to pay only around Rs 26 per litre (the landed price at blending location) whereas the producers were looking at a delivered price of Rs 34.50 per litre.

This pricing includes value-added tax of 4 per cent and taxes like Customs, excise and sales tax including dealer commission.

“The cost of biodiesel that producers are quoting is more than that of parent fuel, that is diesel. We cannot agree on these terms,” said the IOC executive. Diesel costs Rs 32.87 per litre in Delhi and Rs 36.07 per litre in Mumbai.

The Biodiesel Association of India (Bdai) says it has recommended to the central and state governments to ensure that there will be no taxation on the finished product (blended bio-diesel).

“There is no clarification from the government on the taxation issue with regard to bio-diesel. The government has to clearly say that blended diesel will not invite any tax,” said Sandeep Chaturvedi, president, Bdai.

The state governments charge value-added tax varying between zero and four percent on bio-diesel.

Whereas, diesel attracts sales tax varying from 34 per cent in Mumbai to 8.3 per cent in Tripura.