The Union finance ministry may return funds collected through the oil development cess, amounting to Rs 10,000 crore, to the oilpool account as part of a package to tackle the burgeoning oil pool deficit.
This was one of the options informally discussed at the Union cabinets meeting on Saturday, government sources said. No decision was taken on the issue since the petroleum ministry is yet to formalise a concrete proposal, they added.
The cabinet is likely to take a decision on the issue shortly. Sources said a hike in the prices of petroleum products may be announced on the last day of the special session of Parliament, which begins today.
The oil development cess has been a sore issue between the finance and petroleum ministries. The finance ministry has maintained that any move to transfer the dues should be linked to oil sector reforms while the petroleum ministry has been demanding that the sum be repaid with interest.
The oil development cess is levied under the Oil Industry Development Act, which was promulgated in the 1980s. The cess was imposed to overcome the perennial problem of the oil pool deficit and generate resources to expand indigenous oil production.
Lok Sabha Speaker P A Sangma took the initiative to convene a special session to commemorate the golden jubilee of independence. Why should we spoil that by announcinga hike before or during the session? asked the sources. The sources said kerosene prices are unlikely to be touched. However, the prices of petrol, diesel and liquefied petroleum gas will probably be raised, commensurate with the ruling international prices.
The package that will be presented for the cabinets approval envisages a 23 per cent increase in the price of LPG, and a hike of 28 per cent and 10 per cent in diesel and motor spirit prices respectively.
Additionally, as reported in Business Standard on August 21, the package includes decanalisation of import and export of crude oil and products, delicensing of the oil sector and dismantling of the administered price mechanism only for crude refining.
CPM politburo member Sitaram Yechury has claimed that the total amount collected till March 1997 was Rs 28,900 crore.
According to the Act, the entire amount was to be made available to the Oil Industry Development Board to boost the domestic oil industry.
But only Rs 902 crore was transferred till 1991-92, while the remaining funds were withheld by the finance ministry, Yechury claims in a document.
