New Delhi: Domestic LPG prices will not be reduced despite the Budget announcement of a lower central sales tax as Finance Minister P Chidambaram failed to hike subsidies on cooking fuel and rationalise duties to provide relief to loss making national oil companies.
Chidambaram extended the 'Declared Goods' status for LPG supplied for domestic use, thereby attracting a uniform CST of 4 per cent as against current rates, which vary between 4 to 14 per cent.
But fuel retailers - IOC, BPCL, HPCL and IBP - who lost Rs 9,680 crore this fiscal on selling LPG below cost, would not pass on the relief to consumers. Retailers stand to gain about Rs 1,400 crore from the move, which they propose to use for offsetting part of the losses, officials said.
The industry was expecting rationalisation of duties on petrol, diesel, LPG and kerosene, as had been suggested by the Prime Minister-appointed Dr C Rangarajan Committee, to help retailing firms which posted a net loss of Rs 2,898 crore in first nine months of 2005-06 fiscal.
After providing for government subsidy, oil firms lost Rs 148 on sale of every cylinder of LPG and Rs 12 on sale of every litre of kerosene.
Chidambaram, while keeping the subsidy level on LPG and kerosene unchanged at Rs 2,900 crore for 2006-07, raised cess on crude oil produced by ONGC and OIL to Rs 2,500 per tonne from Rs 1,800 per tonnes, to garner about Rs 2,000 crore.
However, pipeline projects for transportation of crude oil, petroleum products and natural gas were notified as project imports thereby attracting lower customs duty than peak rate on project imports.
The Budget also halved customs duty on naphtha and petroleum coke while unifying the same on natural gas, including propane and butane, at 5 per cent.
The Budget also exempted petroleum crude, kerosene for PDS, LPG for domestic supply, petrol, diesel, coal, coke and petroleum gases and fuel from 4 per cent special additional duty of customs.
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