Private sector oil refining companies warned that they would export their diesel and Liquefied Petroleum Gas (LPG) instead of selling them to the local state-run oil marketing companies (OMCs).
The warning comes in response to the finance ministry’s proposal to calculate domestic fuel price based on Export Parity Price (EPP) instead of the currently followed trade parity pricing (TPP).
Private oil refiners such as Essar Oil and Reliance Industries may not sell any fuel to state-owned oil firms if the government changes the way petrol and diesel are priced.
The finance ministry wants petrol and diesel to be priced at a rate they can get in export market, rather than current practice of pricing the fuels after adding transportation and customs duty to the international price.
The difference between the Export Parity Price (EPP) being propagated by the finance ministry and the currently in vogue Trade Parity Price is about $3-4 per barrels.
Industry sources said private refiners feel that if they are to get export parity price, then they might as well set up an export-oriented unit (EOU) or a SEZ refinery, sell the fuel in overseas market and avail of tax benefits like 7-year holiday on payment of income tax and duty free imports and exemption from payment of excise duty.
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