Gas pipelines may get infrastructure status

FM promises a look at duty structure to bring down prices of petroleum products.

Natural gas pipelines may get infrastructure status in the forthcoming Budget, with Finance Minister P Chidambaram saying that being as important as roads and railways, they deserved similar status.

"Like roads and railways help transport goods, pipelines too transport important goods," Chidambaram said.

"Infrastructure status for pipelines would be seriously considered," he later told reporters at the sidelines of an event to dedicate Indian Oil Corporation's expanded Panipat refinery to the nation.

Infrastructure status for pipelines is one of the key recommendations of the petroleum ministry to the finance ministry for the 2007-08 Budget. Such status would exempt them from income tax for a 10-year period. About Rs 20,000 crore of investment is expected in gas pipelines over the next five years, according to industry estimates.

The Gas Pipeline Policy announced in December 2006, by mandating 33 per cent extra capacity per pipeline for use by third parties, makes them a national resource. This strengthened the pitch for grant of infrastructure status.

At the same event, Petroleum Minister Murli Deora said the oil industry was seeking policy reforms and conducive fiscal measures. His ministry would soon forward its tax rationalisation proposals for the Budget. The ministry is reported to have called for a cut in customs duty by 5 per cent to reduce the burden of high crude prices on consumers.

To offset these losses, it has proposed an increase in excise duty on petroleum products. At present, 5 per cent customs duty is levied on crude oil, while 7.5 per cent duty is charged on petrol and diesel. Aviation turbine fuel (ATF) attracts 10 per cent duty and naphtha, 5 per cent customs duty.

Chidambaram said he would look into the demand for rationalisation in the duty structure for oil products.

"Whenever we get such proposals, we do take a serious look at them," Chidambaram said.