Amid a lot of hue and cry over the rise in petrol and diesel prices in the country, off-shore drilling major Jagson International ltd on Thursday said that oil prices might return to the 2014-level if States cut their respective levies.
“With the Government’s pro-active reforms in oil sector, oil prices will be lowered to a competitive level in the near future. I hope the petrol and diesel prices will return to the 2014-level if the states willingly cut their levies significantly,” Pradeep Gupta, Executive Director of Jagson International told The Pioneer in an interview.
Explaining the reason behind the surge of oil prices, Gupta pointed out, saying that there are various factors involved (both global as well as local) in the calculation of petrol and diesel prices. “For instance, crude oil prices movement, refinery production, dealers’ commission, international oil prices et al are all the prime factors which impact the price movement.
If we lower the retail value added tax or VAT, ranging from over 26-38 per cent in different states, petrol and diesel prices will be brought down to a satisfactory level for the consumers in these States,” he said, adding that implementation of Goods and Services Tax (GST) on petroleum products may also reduce the prices.
As far as global crude movement is concerned, it plays a vital role in the oil price movement both globally and domestically. At present, Brent crude was up 34 cents at $56.14 a barrel in early Asian trade, while US light crude was up 10 cents at $50.08.
Referring to global factors, Gupta recalled, “When global crude price was over $80 a barrel, the petrol price was Rs 60 per litre in India, but now it is completely opposite. In order to return to that price level, the Government needs to take up many challenges including implementing GST in petroleum product and monitoring high VAT in different States.”
Recently, the Government urged all States to reduce VAT on petrol and diesel to bring down the prices. ‘Every State has different VAT rates on fuel and if each of them reduces by 5 per cent, consumers will benefit out of it,” Oil Minister Dharmendra Pradhan had said on Wednesday.
According to some sources, Maharashtra, Gujarat and Madhya Pradesh among other states have agreed to cut VAT soon for the benefit of consumers. “Finance Minister Arun Jaitley has hinted that he will write to chief ministers of all States, urging them to reduce VAT on petrol and diesel.
Over 12 out of 18 BJP-ruled States have expressed their intent to reduce the tax and other States are expected to fall in the line soon,” it said. Maharashtra ruled by BJP levies 46.52 per cent VAT, while 47.64 per cent in Mumbai on petrol, which is the highest in the country. Similarly, Andhra Pradesh has 38.82 per cent VAT on petrol while BJP-Governed Madhya Pradesh levies 38.79 per cent on the fuel.
Jagson has successfully done offshore drilling in the Indian waters for more than three decades, owing to its exceptional performance. Various contracts have also been awarded to them by ONGC for offshore drilling against stiff global competition.
When asked about company's future plan, Gupta, however said, “Owing to the huge opportunity in the Indian off-shore market, we plan to increase our operational presence in Indian water and our goal is to expand its rig fleet from the present count. We need more and more bids to win from the off-shore companies in near future.”
Jagson Oil, a 100 per cent subsidiary of Jagson International ltd, has been approved by the Kyrgyzstan Government to establish a petroleum products distributing company in the entire OSH Oblast region of that country.