ATF pricing de-controlled; to cost Rs 3 less

ATF pricing de-controlled; to cost Rs 3 less
ENS ECONOMIC BUREAU

NEW DELHI, MARCH 30: In spite of the existing hitches over the payment of sales tax by domestic aviation companies, the government has decided to de-control pricing of aviation turbine fuel (ATF) as per schedule with effect from April 1, 2001.

With the deregulation of the ATF pricing, the fuel would become cheaper by around Rs 3 in Delhi. ATF prices in Delhi would come down from Rs 20.78 per litre to Rs 17.55 per litre, in Mumbai from Rs 22 per litre to Rs 17.89 per litre, in Kolkata from Rs 22.01 per litre to Rs 19.63 per litre and in Chennai from Rs 22.19 per litre to Rs 17.74 per litre.

Speaking to reporters, Petroleum Minister Ram Naik said that ATF prices in the country will come down by about Rs three per litre from April 1, 2001, after its pricing is deregulated. "Government has decided to de-control pricing of ATF with effect from April 1, 2001," Naik said.µ With the government deciding to implement the dismantling of APM in ATF as per schedule, the government seems to be on course for the dismantling of the other petro products by April, 2002.

Consequent to decontrol of ATF, which presently cross-subsidises LPG (cooking gas) and kerosene, consumer prices of ATF would be market-determined and would be fixed by oil marketing companies.

One of the pre-requisites for decontrolling the pricingof ATF was enactment of a legislation exempting ATF sales to foreign airlines from the levy of state sales tax, as envisaged under the bilateral Air services agreement with other countries, Naik said adding a Bill was introduced for the purpose in the winter session of parliament but could not be passed so far.

"Inspite of the difficulty, the government has decided to keep its commitment on reforms in the hydrocarbon sector as per the schedules notified," he said.

The amounts of sales tax paid to the state governments on sale of ATF to foreign airlines would, pending enactment of the legislation, be reimbursed to the oil marketing companies from the oil pool account, he added.

Post-deregulation, foreign airlines would continue to be exempt from local levies on ATF but domestic companies will have to pay local sales tax and excise duties.

Till now oil companies had to bear the sales tax component of ATF sales to foreign airlines. After passage of the Bill exempting foreign airlines from the levy of state sales taxes, ATF sale to foreign airlines would be duty levy free.

Naik said the Bill could not be passed during the ongoing budget session of parliament due to the impasse over armsgate exposure but hoped smooth sailing once the parliament reassembles after a three-week recess on April 16.

De-control of ATF, which till now had been over-priced to provide subsidy to LPG and kerosene, would impact the oil pool deficit by upto Rs 45 crore annually, he said.