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Run up to the Budget: Oil and gas sector

Tax Structure

Customs Duty

1999-00

2000-01

Item

(%)

(%)

Crude Oil

20

15

Diesel

30

25

Motor Spirit

30

25

Kerosene

0

0

Kerosene (parallel marketing)

30

35

LPG

10

10

Naphtha

5

5

Aviation Turbine Fuel (ATF)

30

25



Excise Duty

1999-00

2000-01

Item

(%)

(%)

Crude Oil

0

0

Diesel

16

16

Motor Spirit

32

32

Kerosene (parallel marketing)

8

8

LPG

8

8

Aviation Turbine Fuel (ATF)

16

16



Background

  • The Government has decided to decontrol the sector in phases by 2002.

  • India's total consumption of crude oil (in terms of refinery crude throughput) has increased from 68.5 mn tons in FY1998-99 to 86 mn tons in FY1999-2000. However, domestic production of crude oil in the same period has gone down from 32.7 mn tons to 31.9 mn tons.

  • In order to reduce the widening oil pool deficit, the Government has increased the prices of petroleum and petro-products twice in this fiscal year.


Previous year (FY 2000-01) budget announcements

The customs duty on crude oil was reduced from 20% to 15%. The same on petro-products was reduced from 30% to 25%.


Pre-budget Wish List

  • Confederation of Indian Industry (CII) has asked for the removal of the 4% Special Additional Duty (SAD) on project imports of refineries.
  • The Petroleum Ministry has asked for infrastructure status of refineries and imposition of the highest slab of customs duty on naphtha for non-power and non-fertiliser consumers.
  • The private players have demanded that they should be granted marketing rights of petro-products


Expectations from the budget

Petroleum and petro-products form a significant portion of customs revenues. Considering that growth rate of customs duty collections have declined substantially in this fiscal year, the Government is unlikely to reduce the customs duty on petroleum and petro-products.


Key Players

Indian Oil Corporation , Bharat Petroleum, Hindustan Petroleum, Kochi Refineries, Chennai Petroleum Corporation, Manglore Refineries and Petrochemicals, Reliance Petroleum etc.

Rediff-Dun & Bradstreet Budget Impact Analysis
Budget 2001

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