Finmin not in favour of price stabilisation fund

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Mumbai, Jul 24: The finance ministry in its recent submission to the parliamentary standing committee on petroleum and natural gas has reiterated that the creation of a Price Stabilisation Fund (PSF), as suggested by the committee was not essential in view of the existing arrangements.

As reported by FE on June 8, the committee had made a strong pitch for the creation of PSF, especially when the oil cess kitty is growing by leaps and bounds, almost to Rs 75,000 crore till March this year.

The committee had argued that creation of a PSF would be necessary to bring stability in prices of petroleum products. It could be done by using money collected from the cess on crude oil to act as a cushion in case of reduction in import and excise duty on liquefied petroleum gas (LPG), kerosene (SKO), petrol and diesel, as well as to provide subsidy on LPG and SKO.

However, informed sources told FE that the finance ministry observed that PSF was not essential as the amount collected by levying cess on indigenous crude has been utilised as per the statutory provisions contained in section 2(k) of the Oil Industry (Development) Act, 1974.