New Delhi, December 13: State-run Oil and Natural Gas Corp (ONGC) has sought levy of windfall tax on crude oil price of over $60 per barrel to pay for fuel subsidies.
Vehemently opposing the present ad-hoc subsidy regime, ONGC has suggested that a Special Oil Tax (SOT) or Windfall Tax may be levied on crude oil producers if their produce fetched any price over $60 per barrel.
In a presentation to the Expert Group of Pricing of Petroleum Products headed by Kirit Parikh, ONGC said 20 per cent of the incremental price over $60 per barrel can be taken as tax to subsidies petrol, diesel, LPG and kerosene.
Forty per cent of price beyond $70 per barrel can be taken as windfall tax, 60 per cent for any rate above $80 a barrel and 80 per cent on price over $90 a barrel, it said.
Stating that crude price hike lead to increase in cost of inputs like field service material and equipment, ONGC said “SOT rate could be calibrated so that ONGC is able to retain some portion of increase in price to cover rise in costs.”
Till last year, upstream firms like ONGC were asked to bear one-third of the total revenue loss on auto and cooking fuel. This year, they have been mandated to bear all of the revenue loss on selling petrol and diesel below cost.
ONGC has in six years since 2003-04 doled out Rs 86,005 crore in fuel subsidies and this year it has already paid Rs 3,059 crore.
—Agencies