Chidambaram hints at oil duty recast

New Delhi, Jan 17 | Updated: Jan 18 2005, 06:00am hrs
Finance minister P Chidambaram on Monday said that the oil and gas sector would be further opened to competition and duties would be restructured to make oil companies more efficient and bring down fuel costs.

Addressing Petrotech 2005 here, he said, The oil and gas sector would be further opened to competition, including retail sector. The segment requires greater consolidation given the technological challenges it faces.

Consolidation in the oil sector is required since there is a huge supply-demand gap and the country will be more dependent on oil and gas in this century, he said.

Pointing out that taxes on the sector have to be fuel-neutral and subsidies transparent, Mr Chidambaram said it is a paradox that there are both taxes and subsidies on the same petroleum products.

Taxes and subsidies in the sector are in conflict with each other, he said, adding that any departure from fuel-neutral taxes and transparent subsidies should be avoided as far as possible.

Referring to the Lahiri committee report, he said the ministry is considering restructuring of petroleum duties. The ministry will take up recommendations of the committee with the Prime Minister, he said.

Referring to volatility in crude prices, the finance minister remarked, Oil prices go down and up. They are deceptive. On inflation, he said, One cheer for inflation coming down to 5.78% in December-end. We will raise another cheer when oil prices come down.