Rs 3,500 crore hit on refiners

Standalone refining companies are upset over the government's decision to cut the Customs duty and excise duty yesterday, which is expected to cause a Rs 3,500 crore dent.

Reliance, Mangalore Refinery, Chennai Petroleum and BRPL are among the refiners which stand to lose revenues. Reliance is expected to lose Rs 400-450 crore due to duty cuts.

Reliance Vice-Chairman Anil Ambani met Petroleum Secretary SC Tripathi today.

Standalone public sector refiners are expected to take up the issue with the government.

Integrated oil companies like Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum are expected to cover their refining losses through higher marketing margins.

"The adjustment (through duty cuts) will help in maintaining prices at their present level. The government has taken over Rs 2,500 crore liability. The refiners will have to share the burden," an official said.

The subsidy on kerosene sold through the public distribution system and cooking gas is estimated at Rs 14,000 crore during the current fiscal, against Rs 12,000 crore at the beginning of the year.

The Centre will chip in with Rs 3,500 crore as its share of subsidy and the remaining Rs 10,500 crore will be borne by the upstream and the downstream companies. "The sharing formula will be worked out in due course," a senior ministry official said.

As per the practice adopted for the last five quarters, the subsidy bill is shared equally by the Centre, the upstream and the downstream companies.