Finance Minister Jaswant Singh may announce a reduction in the customs duty on crude and excise duty on petroleum products in his reply to the Budget debate soon.

An indication to this effect was given here today by petroleum minister Ram Naik who said the concessions were expected to counter the effect of spiralling international crude prices on domestic petroleum product prices.

Petrol attracts a 30 per cent excise duty and diesel 14 per cent. Crude attracts a 10 per cent customs duty.

International crude prices have touched a 12-year high of over $ 37 a barrel.

The rise in global crude prices has already led to a Rs 3.50 a litre increase in petrol and diesel prices since January.

Domestic LPG prices may have to be increased by Rs 60 to Rs 70 per cylinder following cutbacks in budgetary subsidies.

Asked what the government would do about domestic LPG prices if the finance minister did not announce concessions, Naik said: “Whatever is needed will be done.”

The 2003-04 Budget has lowered the subsidy on  domestic LPG from Rs 67.75 (for 2002-03) to Rs 46 per cylinder while that on kerosene has fallen to Rs 1.64 per litre for the next fiscal from Rs 2.45 per litre.

The total subsidy on domestic LPG and kerosene (distributed through the public distribution system) for the current fiscal is close to Rs 10,000 crore (Rs 100 billion), of which the government is reimbursing Rs 6,700 crore (Rs 67 billion).

State-owned oil marketing companies  have not revised domestic LPG and kerosene prices since the last Budget though crude oil prices have risen from $19 a barrel to $ 37 a barrel.

These companies have not even passed on the entire hike necessary in petrol and diesel.

Public sector oil firms have together lost about Rs 3,200 crore (Rs 32 billion) during 2002-03 on selling domestic LPG and kerosene below cost.