Speakers at PetroFed seminar on ‘impact of rising oil prices and possible solutions' sought market determined pricing, elimination of subsidies on products and giving it directly to customers if necessary, reduction of taxes / duties, and CENVAT and VAT merged into one for oil and gas sector.
Inaugurating the seminar on May 10, 2005 at the India Habitat Centre, New Delhi, Sh. N. Janardhana Reddy, MP and Chairman, Standing Committee on Petroleum and Natural Gas pointed out that the country's current dependence of over 70% on imported crude oil is likely to go up to 85% by the end of the decade. He urged for judicious steps to be taken to resolve the pricing issue amicably.
Earlier, welcoming the hon'ble MPs and over 120 participants from the oil and gas industry, academia, analysts and media persons, Chairman PetroFed Sh. S. Behuria brought out that the contribution of the oil and gas sector to the central and state exchequers was the highest in the country. The contribution of customs and excise duty to the Central Government of Rs. 35,453 crore in 2001-02 had increased to an estimated Rs.55,160 crore during 2004-05. Similarly the sales tax collection by States had increased from Rs.24,884 crore in 2001-02 to an estimated to Rs.37,001 crore in 2004-05. On the other hand, the gross under recovery on MS & HSD, SKO & LPG for 2004-05 and 45 days of 2005-06 (1.4.2005 to 15.05.2005) was Rs.20,310 crore and Rs.5860 crore respectively. In the MS Retail Selling Price (RSP) of Rs.37.84 per ltr. the excise duty component was Rs.14.59 while the sales tax was Rs.6.23. Similarly in the HSD price of Rs.26.28 per ltr. the excise duty was Rs.4.80 while sales tax was Rs.2.81.
The seminar witnessed four presentations. The first on the ‘international and national oil scenario' by Shri Deepak Mahurkar, Sr. Consultant (Oil & Gas), PricewaterhouseCoopers Pvt. Ltd. There were ‘industry perspectives' by Sh. P. Raghavendran, President (Refinery Business) RIL and by Sh. E. Unnikrishnan, GM, IndianOil. The last presentation was on ‘impact of world oil prices on the Indian economy and possible solutions' by Prof. Sebastian Morris of Indian Institute of Management, Ahmedabad.
It emerged that oil and gas reforms were at cross roads and that a completely deregulated market was the need of the hour instead of moving from an administered pricing mechanism (APM) to another APM (Arbitrary Pricing Mechanism).
It was brought out during presentations that between 1.04.2002 and 1.05.2005 FOB prices of MS and HSD had gone up by 137% and 167% respectively while the RSP had gone up by only 43% and 59%. Under realization on MS/HSD for oil marketing companies was Rs.2498 crore in 2004-05 whereas it was Rs.3129 crore for the first one and half months of 2005-06 (1.04.2005 to 15.05.2005). It also emerged that stand-alone oil marketing company ? IBP, was running into losses. The refining and marketing margins in India are one third or less than those of Pakistan , Thailand or Australia in case of gasoline. They are one fourth or less than those of USA , France , Germany , UK etc.
Chairman PetroFed Sh. S. Behuria, Vice Chairman PetroFed Sh. P. Raghavendran and the speakers fielded a host of questions in the lively debate that ensued the presentations. It clearly emerged that the only viable option was a suitable increase in retail selling prices to save oil marketing companies from virtual bankruptcy.
Director General PetroFed, Sh.A.K. Arora, proposed a vote of thanks.
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