Petroleum Minister Murli Deora has asked Prime Minister Manmohan Singh for a Re 1 per litre excise duty cut on crude oil to enable a reduction in auto fuel prices, necessary to contain the growing inflation.
Deora has written to Singh and Finance Minister P Chidambaram stating that the rise in international oil prices this month has seen an erosion of gain on diesel sales.
Oil firms are making a loss of Rs 0.30-0.35 a litre on the sale of this most consumed auto fuel, a top official said.
The hardening of international oil prices, which has seen Indian basket of crude rise from $51.74 a barrel in the second fortnight of January to $56.18 this month, has also reduced the profit made on petrol from Rs 3.50 a litre to less than Rs 2
a litre.
"For a very brief period, oil companies made a profit of about Rs 0.50 a litre on diesel but it has evaporated. There is a loss on diesel sale, leaving no scope of price reduction unless the Government decides to cut excise duty," the official said.
If Deora's request is heeded, petrol price can be cut by Rs 2 per litre and that of diesel by Re one per litre, the official added. The current excise duty on diesel is 8.16 per cent plus Rs 3.32 a litre -- the two together translating into a total levy of Rs 4.98 per litre.
Last year, excise duty on diesel was Rs 3.41 per litre.
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