Imposition of carbon surcharge: 17 percent hike in POL prices from July 1 likely

The consumers are likely to face 17 percent hike in oil prices after imposition of “carbon surcharge” on petroleum products in place of petroleum development levy (PDL) effective from July 1, 2009. However, the government has decided not to levy “carbon surcharge” in place of PDL on JP-4 and JP-8 and the Finance Ministry has formally conveyed the decision to Petroleum Ministry. Sources in the Finance Ministry revealed to the Business Recorder on Tuesday that the Finance Ministry had conveyed to the Petroleum Ministry that the government would end the PDL from July 1 and levy “surcharge” on petroleum products, including kerosene oil, high speed diesel, motor spirit (MS), light diesel oil (LDO) and HOBC. According to the Finance Bill 2009-10, the government will charge rupees eight per litre carbon surcharge on high speed diesel oil (HSDO), Rs 10 per litre on motor spirit (MS), rupees six per litre on kerosene oil, rupees three per litre on light diesel oil (LDO) and Rs 14 per litre on HOBC. After imposition of carbon surcharge, the government may deregulate price of all petroleum products and authorise oil marketing companies (OMCs) to make automatic adjustment in oil prices in line with the global oil prices. (June 24, 2009)