OilMin rules out reducing ATF price

Written by Agencies | New Delhi | Updated: Aug 27 2009, 21:34pm hrs
Petroleum Ministry ruled out reducing the base price of ATF as demanded by the cash-strapped aviation industry, saying there was little scope for tinkering given the low margins oil firms earn on processing of crude bought at international rates.

"(While) the base price (of jet fuel or ATF) is linked to international prices (import parity), the price build-up has a significant tax component," Petroleum Secretary R S Pandey said in New Delhi.

State-run fuel retailers Indian Oil, Bharat Petroleum and Hindustan Petroleum pay international rates for buying crude oil and so the products refineries produce are also priced at international parity.

Pandey said refinery margins or the value a company earns for processing a barrel of crude oil, were low. "Margins are not very high... they have (infact) shrunk in recent days and you have to appreciate this (before seeking a cut in base price)," he said.

Central and state taxes make up for more than one-third of the jet fuel price, he said, adding the Government does not control the price of aviation turbine fuel (ATF) as it was a deregulated product.

The Rs 37.48 per litre selling price of ATF in Mumbai comprised Rs 13.46 a litre in excise duty and sales tax.

"Taxes are entirely in domain of the finance ministry and the states," he added.