HPL hit by naphtha levy as FM ignores Left plea

Written by Political Bureau | Kolkata, Apr 29 | Updated: Apr 30 2008, 06:54am hrs
Even as the CPI(M) on Tuesday promised to picket central government offices nationwide on May 15 to protest the UPA government's "failure" to control prices, the Lok Sabha quietly passed the Finance Bill without reversing a key duty that threatens the viability of Haldia Petrochemicals Ltd, the Left Front government's prestige project.

Union finance minister P Chidambaram's budget for 2008-09 had dealt a severe blow to HPL, a three-way venture in which the state government is a major partner, by re-imposing the 5% import duty on naphtha, the raw material from which HPL makes polymers.

HPL is the only petrochemicals plant in India that has to import naphtha --- the others use natural gas feedstock or make their own naphtha.

The duty on naphtha had been brought down to zero from 5% two years ago, together with the duty on polymer imports, which was reduced to 5%. The latest budget had removed the duty differential between raw material and product.

The picketing plan was announced by CPI(M) general secretary Prakash Karat today after a meeting of the party's politburo.

"The government is callous to the supporters of the peopleUPA government has failed to take any measures to check the price hike," Karat told reporters at the Alimuddin Street headquarters of the CPI(M)'s state unit.

"We are not happy at allthe way the Central government is tackling the crisis," he said.

Late in the evening, when details of the Finance Bill came in, it was left to the state's commerce & industry minister, Nirupam Sen, to handle the government's rebuff.

"We are extremely disappointed to learn that our request for reversal of the reimposition of 5% import duty on naphtha has not been granted," Sen said in a statement.

Sen said he had taken up the matter with Union finance minister P Chidambaram, and Chief Minister Buddhadeb Bhattacharjee had also been pursuing the matter with the Centre.

"The non-reversal of the import duty on naphtha is of deep concern to us," Sen said. "We will continue our efforts with the finance ministry for reversal of the duty."

The government's import-price parity formula will force HPL to pay the higher cost on its entire naphtha consumption, whether imported or domestically-produced.