Windfall tax not under my jurisdiction: Deora

"A decision on windfall tax can only be taken by the finance ministry, and only the commerce ministry can decide on the EoU status for refineries," Deora said. "It is not under my jurisdiction," he said.

The Samajwadi Party said last week that the windfall profits made by the private oil companies should be taxed. This tax, the party suggests, can be used to partly fund the oil subsidy bill of the government-owned oil marketing companies.

 

The Mulayam Singh-led Samajwadi Party has also said that export of petroleum products should be banned in order to improve availability in the domestic market. Reliance Industries exports almost all the petroleum products in produces from its Gujarat refinery after it was granted an EoU status early last year.

The Manmohan Singh government is depending on the Samajwadi Party to for it to remain in majority after the Left parties withdrew support to the government on Tuesday after the Prime Minister said he would go ahead with pursuing the nuclear deal with the US.

Experts however say it is not possible to impose a windfall tax on the private oil companies are they do not yet have any significant oil and gas production. "RIL is yet to start producing gas, while Cairn's oil from Rajasthan is over a year away," said a Mumbai-based analyst.

Another Delhi-based analyst said that windfall tax should not be levied on refineries as their high margins are due to operational efficiencies. "The government can not tax them for being efficient," the analyst added.

Meanwhile Deora said India needed the nuclear deal with the US to help ease energy shortages. "After 60 years of independence, we still have shortage of electricity in India. I am supportive of the deal as it will give the people the much needed electricity and the nation energy security."

Deora also said that the government was still evaluating the success of the seventh round of the New Exploration Licensing Policy (Nelp VII), bidding for which closed on June 30. Other than British Petroleum and BHP Billiton, the round failed to attract the big global oil exploration companies yet again. Moreover, 12 blocks of the 57 offered did not receive any bids while 19 blocks received only single bids.