Budget Impact Analysis: Oil
& Gas
Overall impact: Positive
Impact of change in policy
Administered Pricing Mechanism for petroleum
products will be dismantled from 1-Apr-02 and prices of petroleum products
will be market determined.
With effect from 1-Mar-02, prices of diesel
and petrol will come down by around 50 paise and Re 1 per litre respectively.
The price of LPG will be rise by about Rs 40
per cylinder and that of kerosene oil for PDS by about Rs 1.50 per litre with
effect from 1-Mar-02.These subsidies will be borne by the consolidated fund.
Subsidies on LPG and kerosene will be on a specified
flat rate basis from 1-Apr-02. Retail prices of these products will then vary
with crude oil price changes in international markets. The subsidies will
be phased out in the next 3 to 5 years.
Private companies will be permitted in distribution
subject to specified guidelines.
A Petroleum Regulatory Board will be set up
to oversee the sector.
Freight subsidies will continue to be provided
for LPG and kerosene supplied to far-flung areas. Subsidies to refineries
in the North-East will also continue.
Excise Duty
Concessional rate of 8% excise duty applicable
to LPG, Kerosene and CNG has been abolished. These will now attract the CENVAT
rate of 16%.
Ad Valorem rate of excise duty applicable to
motor spirit has been reduced from 90% to 32%. However a surcharge of Rs 6
per litre has been imposed on motor spirit. But the surcharge on Ethanol based
motor spirit will be Rs 5.25 per litre.
Excise duty on HSD has been reduced from 20%
to 16%.
The rate of cess applicable to indigenous crude
oil under the Oil Industry (Development) Act has been increased from Rs 900
per metric tonne to Rs 1,800 per metric tonne with effect from 1-Mar-02.
Customs Duty
Customs duty on non- PDS kerosene has been reduced
from 35% to 20%. However, the customs duty on kerosene sold under the PDS
has been increased from 5% to 10%.
SAD has been imposed on manufacture of N-paraffin/LAB.
