Baalu To Press For Dual Diesel Pricing To Cut Oil Pool Deficit

Petroleum minister T R Baalu yesterday told Business Standard that he would suggest dual pricing for diesel, removal of subsidy on naphtha and furnace oil used in fertiliser units, and return of a part of the oil industrys contribution to the exchequer at a meeting with Prime Minister I K Gujral and finance minister P Chidambaram today. The Prime Minister has convened the meeting to discuss measures to reduce the oil pool account deficit, which has crossed Rs 16,000 crore.

Baalu may also ask the finance minister to announce cuts in customs and excise duties on petroleum products. It is not too late for the finance ministry to announce these reliefs since the Finance Bill has still not been passed by the Rajya Sabha, said Baalu.

 

The inter-ministerial meeting will be followed by a United Front steering committee which has been convened today to discuss a possible increase in the price of petroleum products.

In case Baalus proposals are favourably received by Gujral and Chidambaram, they will be placed before the Steering Committee for further discussion.

The minister said he did not see any justification for subsidised diesel being used to generate power. Pointing out that many households in the metros as well as several industrial units have put up captive diesel-fired generating units, he called for a different price to be charged for the diesel which is used in generating sets.

Asked if dual pricing of diesel was a practical solution, the minister pointed out that a precedent existed in the dual pricing of kerosene and liquefied petroleum gas. His ministry could work out an arrangement for dual pricing of diesel, he added. Baalu also opposed the subsidy on naphtha and furnace oil for fertiliser units, which amounted to around Rs 1,500 crore during the last financial year. If the government wants to subsidise fertiliser production, then the finance ministry should do so on its own account, he said.

Baalu said the 1996-97 budget had projected revenue worth an additional Rs 1,000 crore through an increase in duties on petroleum products. However, the finance ministry actually mopped up an additional Rs 5,360 crore because of a rise in international prices of crude oil and other petroleum products. This bonanza of Rs 4,360 crore should be returned to the oil industry, he said. However, the minister said he was against any increase in the prices of motor spirit which were already overpriced.

Petroleum price hike to top steering panel agenda