People's Democracy

CITU Denounces The Deceptive Ad-Campaign On Petro Hike 

  The following is the text of the statement issued by the CITU on June 8, 2006.

 THE Centre of Indian Trade Unions (CITU) denounces the ad-campaign of ministry of petroleum & natural gas to justify a totally unjustified price hike in petrol and diesel without addressing the major issue of pricing mechanism which is totally opaque. The government owes an explanation as to why people have to pay Rs 25 per litre for petrol and Rs 12 per litre for diesel as taxes and duties when the crude oil price is not more than Rs 18 to Rs 19 per litre and why instead of giving tax-relief to navaratna oil marketing companies, the price hike was resorted to. The government must explain the basis of present pricing mechanism, which gives picture of computed/notional figures of profit and loss without referring to actual cost of refining and marketing along with the ‘reasonable profit’ margin, if any of oil companies including the private stand-alone refineries. The ad-campaign should explain why export duty concession (duty draw back) to the tune of Rs 3500 crore is being extended to exporters of petroleum products when the global price is so high.   

The CITU demands in the interest of navaratna PSUs, the oil cess of Rs 7500 crore this year @ Rs 2500/tonne collected on the crude oil produced by ONGC and OIL, be immediately utilised for supporting navaratna oil marketing companies instead of using the same for managing revenue deficit by the union finance ministry. 
  
The public sector oil marketing companies (OMCs) are obliged to procure from private sector refinery large quantities of petrol, diesel and LPG at import parity price. The CITU demands that instead of shedding crocodile tears for navaratna PSUs, the government should explain the rationale of providing big bonanza to the private refiner who is earning a refining margin of 12 dollars/barrel as compared to 7 dollars/barrel even two years back. Against an industry average refining cost of 2 to 3 dollars/barrel, it requires a lot of explaining as to how such a big refining margin is being allowed to the largest standalone refiner. 
  
The CITU therefore demands a transparent cost sheet from the government giving break-up of landed cost of crude oil, refining/production cost, taxes and duties etc. The government should also clarify as to what extent it is going to allow standalone refineries to increase their refining margin. Instead of addressing the real issues, the government should not needlessly squander public money on an ad-campaign to delude the people.