Private oil refiners may not sell fuel if pricing mechanism changes: Media Reports

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In case the government changes the method of pricing diesel and petrol, private oil refiners such as Reliance Industries Ltd. and Essar Oil might not sell fuel to the state-run oil companies, said the media reports.

Rather than current practice of pricing the fuels after adding transportation and customs duty to the international price, the Finance Ministry is considering to price petrol and diesel at a rate they can get in export market.

Difference between currently used Trade Parity Price and the government's propagated Export Parity Price is approximately USD 3-4 per barrel.

Private refiners feel that if they will get export parity price, then they might also set up an export-oriented unit (EOU) or a SEZ refinery, sell the fuel across the globe and avail tax benefits like 7-year holiday on payment of income tax and duty free imports and exemption from payment of excise duty, sources told media.

Oil Minister, M Veerappa Moily has already raised concerns about the Finance Ministry's move, which is likely to put PSUs in danger.

"From 2005-06, the oil marketing companies have not been adding any margin on crude oil or on petroleum products. What is import price plus transportation and taxes is all that is there in the selling price," the oil minister had said.

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Story first published: Monday, March 18, 2013, 13:30 [IST]
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