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Plan panel for rationalising petroleum tax, subsidy

New Delhi, Aug 30 (IANS) Planning Commission Deputy Chairman Montek Singh Ahluwalia Wednesday stressed the need for rationalising tax on petroleum products and slashing subsidies while admitting that consumers would have to share the burden of rising global crude prices.

Wednesday, August 30, 2006 | 9:10:03 PM IST (+05:30 GMT)
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New Delhi, Aug 30 (IANS) Planning Commission Deputy Chairman Montek Singh Ahluwalia Wednesday stressed the need for rationalising tax on petroleum products and slashing subsidies while admitting that consumers would have to share the burden of rising global crude prices.

'There is a need to end the subsidy in the long run and also a need to optimise tax structure on petroleum products. Once you reach an appropriate level it (the burden) should be passed on to the consumers (by raising retail prices of petroleum products),' said Ahluwalia.

He also unveiled the final report of an expert panel, headed by Planning Commission member Kirit S. Parikh, on an integrated energy policy.

The main thrust of the report is to meet the challenges of ensuring adequate supply of energy at the least cost, providing clean and convenient lifeline energy to the poor and creation of competitive energy markets while ensuring energy security.

The report recommends consistent relative prices, level playing field for all players, uniform treatment of external factors and development of public infrastructure, regionally balanced developments and energy for the poor.

Envisaging coal as the primary energy fuel of India till 2031-32, the report has recommended setting up a national energy fund to finance research projects and ensure supply of lifeline energy to all, particularly the poor people through targeted subsidies.

In the petroleum sector, the report stresses the need for creating real competition in the market through real price competition at the refinery gate and at the retail level, while simultaneously strengthening the Directorate General of Hydrocarbon (DGH), which looks after exploration activities, and expediting the setting up of a regulator for the refining and marketing activities.

Stressing the need for ensuring fair play, Parikh said: 'We need a regulator (for the energy sector) as it is not a substitute to competition.'

For renewable energy sources, the report recommends that incentives should be for actual outcomes of projects in terms of power generation and not just capital costs on projects as is the practice now.

Underlining the need for more efficient use of energy, the report highlights that it is possible for India to raise energy intensity by 25 percent.

Considerable energy savings are possible in mining, electricity generation, transmission, distribution, water pumping, industrial production, mass transport, building design, heating and air-conditioning, lighting and household equipments, the report says.

It has recommended that the Petroleum Conservation Research Association (RCRA) should be merged with the Bureau of Energy Efficiency, which should be given an autonomous status with central government funding.

Copyright : Indo-Asian News Service
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