FM moves in to create platform to devise policy initiatives

Updated: Mar 1 2006, 05:30am hrs
Taking forward the oil industrys vision of making India an export oriented refinery hub for petroleum products, finance minister P Chidambaram today announced measures to promote investment in the petroleum, chemicals and petrochemicals (PC&P) sector.

The announcements come in the wake of Shell Global Solutions, consultants to Indian Oil Corporation (IOC), having recently submitted its report to the petroleum ministry on making India a destination for exporting petro-products. The report recommends setting up of two to three mega integrated refining cum petrochemical hubs in the country as against the stand-alone petroleum refining units.

In line with this, Mr Chidambaram, in his Budget proposals for 2006-07 today announced the setting up of a task force to facilitate development of large PC&P investment regions.

Expecting development of two to three such investment regions in 2006-07, Mr Chidambaram said, As petroleum, chemicals and petrochemicals is a sector with potential for large investment and emplyment, world-class developers and investors will be associated with this Task Force.

In addition to this, Mr Chidambaram announced halving the customs duty on naphtha and petroleum coke while unifying the same on natural gas including propane and butane at 5%. While natural gas import currently attracted 5% import duty, LPG (made up of propane and butane) had nil duty.

Bleeding hearts in the sector
Additional cess on crude oil hits ONGC by Rs 1600 crore; OIL by Rs 300 crore
Reduction in naphtha duty reduces PSU refiners profitability by Rs 600 crore
LPG on declared goods list hits states by Rs 1600 crore
Pipeline projects declared as project imports will attract lower duties
The Budget proposals for 2006-07 have also exempted crude, kerosene for PDS, domestic LPG, petrol, diesel, coal, coke and petroleum gases and fuel from the 4% special additional duty of customs.