OMCs to Govt: Cut taxes or Face Petrol Price Hike

Bangalore: State-run oil companies have served an ultimatum to the government that they will raise petrol prices by 9.6 a litre if excise duty is not cut or they are not provided compensation for 49-crore per day loss on fuel sale. "We have been very patient by not raising prices since December despite our cost of production spiralling. But there is a limit to which we can borrow money and produce fuel for the country," Indian Oil Corp (IOC) chairman RS Butola said. Also read: Fuel retailers threaten to raise petrol prices IOC, together with Hindustan Petroleum and Bharat Petroleum , is losing 49 crore per day on petrol sale alone. They are losing another 573 crore every day on selling diesel, domestic LPG and kerosene below cost. Butola said that oil PSUs, in the first 15 days of April, lost 745 crore in revenue on petrol, whose pricing was freed from the government control in June 2010. But rarely have the product prices moved in tandem with cost as oil companies bowed to government diktats. "We have suggested the government temporarily end deregulation and give subsidy to make up for the difference between cost of production and sale price. Alternatively, the government can cut the 14.78 excise duty it collects when a consumer buys a litre of petrol," he said. The states also levy VAT or sales tax ranging from 15 percent - 33 percent (10.30 a litre to 18.74 per litre), which too can be cut to avoid a price hike. "If the suggestions are not accepted, we would have no option but to increase the price of petrol by 8.04 per litre (excluding state levies) with immediate effect", he said. After including 20 percent VAT, the hike in petrol prices in Delhi will come to 9.60 a litre.