Deora to meet Chidambaram over oil company losses

April 14th, 2008 - 11:31 pm ICT by admin  

A file-photo of P. Chidambaram
(Lead)

New Delhi, April 14 (IANS) Petroleum Minister Murli Deora will meet Finance Minister P. Chidambaram later this week, seeking compensation for oil companies for revenue losses due to the high prices of fuel in the international market and also reinstatement of seven-year tax holiday for the hydrocarbon exploration and production segment. “The minister (Deora) will meet finance minister by the end of this week, probably Friday or Saturday,” said a senior petroleum ministry official.

He said the petroleum ministry has already given detailed figures to the finance ministry, which is expected to complete the scrutiny of the data in the next three-four days.

“We are losing about Rs.3.2 billion ($80.3 million) a day on sale of petrol, diesel, domestic LPG (liquefied petroleum gas) and PDS kerosene,” Indian Oil Corp (IOC) chairman Sarthak Behuria told reporters on the sidelines of fifth Asia Gas Partnership Summit here.

Deora, who was also present at the summit, told reporters that the quantum of oil bonds for oil companies to tide over these losses was yet to be decided.

“The cabinet committee had decided that the finance ministry will determine the quantum of bonds to be issued in consultation with the petroleum ministry,” said Deora.

The central government last hiked fuel prices in February when it raised petrol price by Rs.2 and that of diesel by Re.1.

The government is unlikely to increase the fuel prices again in the present context, when inflation has reached record levels.

Meanwhile, Petroleum Secretary M.S. Srinivasan said the removal of tax holiday would not be a “deal breaker” or deter companies from bidding for blocks under the seventh round of the New Exploration and Licensing Policy (NELP).

As per the Income Tax Act, companies producing and refining mineral oil will get 100 percent tax relief on profits for seven years.

But, according to the recently introduced Financial Bill, 2008, tax holidays will be withdrawn if operations begin after April 1, 2009. Further, the term ‘mineral oil’ does not include petroleum and natural gas, thereby removing the exploration and production sector from the ambit of the tax relief.

“There are certain apprehensions, which we have collected and given to the finance ministry,” Srinivasan said, adding that the issue would be resolved amicably.

He said the effect of the withdrawal on the bidding under NELP could not be discerned yet, as most of the bids come only in the last week. The deadline for NELP VII is April 25, extended from the earlier limit of April 11 to get more clarity on the subject from the finance ministry.

“As per our past experience, more than 90 percent of the bids only come in the last week and half of that in the last two days. So, we are waiting and watching. It’s not possible to predict before,” he said.

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