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Taxing oil companies not under petroleum ministry: Deora

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Agencies

Posted: Jul 09, 2008 at 1337 hrs IST

New Delhi, July 9: Petroleum Minister Murli Deora said on Wednesday that his ministry cannot decide on imposing the so-called windfall profit tax on private oil producers and refineries.

"The issue does not come under my ministry," he told reporters in New Delhi. "It’s for the finance ministry to decide." The Left parties and more recently the Samajwadi Party, that is now supporting the Manmohan Singh government after the Communist withdrew their support over the nuclear deal with US, have been demanding that companies like Reliance Industries, Essar and Cairn be taxed to tied over the crisis created by high oil prices.

They have also demanded review of export oriented status of the Jamnagar refinery of Reliance. "My dear, you would know that the law on EoUs is not in my jurisdictions. It is with the Commerce Ministry. How can I then say anything on that," he said when a reporter asked him if he was proposing review of Jamnagar's EoU status.

Petroleum Ministry officials said no ministry unilaterally can levy windfall tax as it may require Parliamentary approval.

Besides, the private firms cannot be singled out for the tax and if all standalone refineries or units with no fuel retailing are to be charged of such tax, units such as ONGC's subsidiary Mangalore Refinery, Chennai refinery of IOC and Numaligarh refinery would also come under the ambit of the new tax.

Deora said India needed the civilian nuclear deal with the US to help ease energy shortages. "After 60 years of independence, we still have shortage of electricity in India. I am supportive of the deal as it will give the people the much needed electricity and the nation energy security."

"The issues regarding (withdrawal of) export-oriented unit status to refineries and imposition of windfall tax do not fall within the purview of my ministry. Therefore, it is not appropriate for me to comment on these matters," Deora said.

In the same breath, he added that the Government was open to any suggestions on the issue. "We are open to discuss with anyone suggestions they have in this regard."

While state-run firms are faced with huge revenue loss as they capped domestic retail prices despite two-fold jump in international crude oil prices, Reliance Industries' Jamnagar refinery has seen net profits jump 28 per cent to Rs 15,261crore in 2007-08.

The refinery that has been turned into pure export oriented unit earned USD 15 a barrel margin, almost double of its public sector competition.

The Left and the SP have questioned the UPA Government's move to give Jamnagar export oriented tag when the nation was short of critical cooking fuels like LPG and kerosene.

They have sought review of the export oriented tag and also sought levy of 'windfall' tax on it as well as other private refiners like Essar Oil and private crude producers like Cairn and BG, who do not contribute in sharing the burden caused by high global oil prices.

Deora's aide said the decision to convert Reliance's Jamnagar refinery into export oriented unit was taken by the Commerce Ministry after several rounds of inter-ministerial consultations that did an in-depth study of demand-supply projections.

Indian Oil, Bharat Petroleum and Hindustan Petroleum, he said, are adding new capacities and expanding existing ones to bridge the deficit in LPG and kerosene production. "In fact, these refineries will have exportable surplus in coming years."

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