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Naik sore over Re 1 Maharashtra tax on petrol, diesel

BS Corporate Bureau

The Union Minister for Petroleum and Natural Gas Ram Naik expressed concern over the Maharashtra government's decision to increase sales tax on petrol and diesel by Re 1 a litre.

"The budget reduced petroleum prices to benefit the consumers while dismantling the administered price mechanism, but the state government has mopped up the benefit for itself by increasing sales tax by Re 1 for petrol and diesel," Naik said, at the sidelines of a seminar organised by Maharshtra Economic Development Corporation in Mumbai on Friday.

Terming the state government's decision as "bad economics", Naik said that he has discussed the issue with the Maharashtra government's Finance Minister Jayant Patil, and said, "I expect him to take a broader view in this regard."

Naik said, "It is not only Maharashtra government, even Madhya Pradesh has also increased sales tax on the petroleum products. Others (state governments) might also increase sales tax. This does not serve the purpose."

On whether the state government will roll back the taxes, Naik replied, "Let us see how the state government responds."

Addressing the seminar, Naik said, "It was not right for the state government to mop up benefits by increasing sales tax by Re 1 a litre for petrol as well as diesel. We are now getting into the new era in oil industry, and I do hope that with the co-operation of all sections, this will ultimately prove beneficial to the consumers and also the national economy."

On the merger plans of three state-owned oil companies - Indian Oil Corporation, Oil and Natural Gas Corporation and Gas Authority of India, Naik said that "without a merger, these three companies are already co-ordinating with each other on several issues such as the rate at which ONGC would supply crude to IOC or what price GAIL would pay for the natural gas it gets from ONGC."

On the common carrier principle for transportation of petroleum products, Naik said that the oil companies will have to soon settle the common carrier principle. "It is applicable to pipelines but not all of them," he indicated.

However, the minister refused to give details on the common carrier principle pointing out that it will be in the Petroleum Regulatory Board Bill which will be discussed in the Parliament this session.

On exploration front, Naik said that bids have been invited for 27 more blocks and road shows will begin in the last week of April in Delhi after the parliament session.

This will be followed by roadshows in London sometime in May and later in Houston.

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