Windfall tax not applicable to private players: finance ministry (Lead, Superseding earlier story)

January 12th, 2009 - 10:27 pm ICT by IANS  

New Delhi, Jan 12 (IANS) The ministry of finance Monday clarified that there was never any proposal to apply windfall tax to private oil producers in the country.Special secretary of the ministry Rita Menon said at a session in Petrotech 2009 that the windfall tax had been a proposal to “formalise” the discounts offered by state-run oil producers as part of the subsidy-sharing mechanism.

It had been also mentioned in the B.K. Chaturvedi committee report on the oil sector, which was yet to be accepted by the government.

As per the proposal, the government would consider taxing a part of the earning if the oil price went above $75 per barrel.

The proposal had gained ground when the oil producers, ONGC and Oil India Ltd. earned profits due to the high prices that reached a peak of $147 last June, which have since gone down drastically to below $39 Monday.

Menon added that it was only applicable to blocks which had been allotted on negotiation or nomination basis.

Cairn Energy’s Rahul Dhir said that there had been a lot of confusion on the issue of applicability of Windfall tax on the private sector, which had a bad effect on India’s image as destination for investment in the oil exploration and production industry.

Menon said the petroleum ministry could pose a question to the finance ministry to clarify this position in the forthcoming budget.

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