Govt asks petroleum cos to roll back price hike

Companies in state hiked prices of petrol and diesel from April 1

Reacting sharply to the 'unilateral' hike in petroleum and diesel prices in the state in the name of value-added tax (VAT), the Andhra Pradesh government today asked petroleum companies to restore the prices to the previous level.

Oil companies in Andhra Pradesh have enhanced the prices of both petrol and diesel by 64 paise and 49 paise per litre respectively from April 1, 2005 stating that under VAT, the tax on diesel has been raised from 19.33 per cent to 21.33 per cent while the tax on petrol has been raised from 30.55 per cent to 32.55 per cent.

Addressing a press conference here on Sunday, Konatala Ramakrishna, minister for commercial taxes, said that the companies have been paying the current rate of taxes to the state government from 2001. There was no change in the tax structure as both the products along with liquor do not come under VAT rates.

Chief minister Y S Rajasekhara Reddy has brought the matter to the notice of Union petroleum minister Mani Shankar Aiyar, the minister said.

According to the minister, petroleum companies are liable to pay non-transferable turnover tax (TOT) of 2 per cent under the Andhra Pradesh general sales tax from November 2001, which forms part of the existing tax rates. This non-transferable 2 per cent tax has now been shifted on to consumers, which, according to the minister, is totally unjustified.

"The Indian Oil Corporation says that the hike has been effected in the state taking into account the element of state surcharge which was raised from Rs 138 per kilo litre to Rs 470 per kilo litre on diesel and Rs 295 per kilo litre to Rs 785 per kilo litre on petrol from September, 2002. But there was no explanation from them as to why, then, they had increased the prices of both the fuels by Rs 1.04 and 76 paise respectively at that time, while the price hike in other states was only a maximum of 22 paise in case of petrol and 34 paise on diesel," the minister said.

The minister also took strong objections to what he termed as unilateral approach of the oil companies, saying that the companies did not consult the state government before taking the decision.