Civil Aviation, Petroleum Min to move FinMin on jet fuel

In a bid to bring down the cost of air operations in the country, Civil Aviation and Petroleum ministries would make a joint representation to the Finance Ministry to notify jet fuel as a 'declared good', enabling levying of a flat four per cent tax on it. At present, sales tax on aviation turbine fuel (ATF) ranges from four to 35 per cent, varying from state to state. The cost of jet fuel accounts for about 40 per cent of the operating cost of the Indian carriers, most of which are facing financial trouble.

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The decision to jointly approach the Finance Ministry on the issue was taken at a meeting between Civil Aviation Minister Ajit Singh and Petroleum Minister M Veerappa Moily. Talking to reporters after the meeting, Singh said Moily agreed to the proposal. Moily said his ministry was in agreement on giving declared goods status but the issue has to be decided by the Finance Ministry. "We will jointly make a representation to the Finance Minister," the oil minister said.

At the meeting, Singh is believed to have said that ATF prices in India were several times higher than countries in the neighbourhood, including those in Southeast and the Gulf. It was also said to have been pointed out that foreign airlines operating to India picked up jet fuel at concessional rates due to international agreements, which was far below what was paid by the Indian airlines for the same amount of fuel from the same airport.

The two ministers also agreed to a proposal to put ATF under the Petroleum and Natural Gas Regulatory Board (PNGRB) to check any cartelisation among the oil companies. Charging the oil firms with indulging in cartelisation in ATF pricing as they were charging the same price at different airports, Singh said placing jet fuel under PNGRB would mean that the Board could monitor prices and take corrective measures if it felt that cartelisation was taking place.