To ensure transparency in sale of jet fuel, the oil ministry on Tuesday agreed to bring the aviation turbine fuel (ATF) under the purview of the Petroleum and Natural Gas Regulatory Board (PNGRB).
Aviation minister Ajit Singh had sent a proposal to the oil ministry in this regard a few months ago. PNGRB is mandated to regulate refining, processing, storage, transportation, distribution, marketing and sale of petroleum and petroleum products in the country and to promote competitive practices in the sector.
Ajit Singh and oil minister M Veerappa Moily met on Tuesday to discuss issues related to jet fuel pricing. The ministers agreed to make a joint representation to finance minister P Chidambaram to give ATF a ‘declared goods’ status.
Though the finance ministry has rejected the request many times in the past, a senior aviation ministry official, who was a part of Tuesday's meeting, said that the approval was crucial as most domestic airlines were suffering huge losses due to high ATF prices.
The inclusion of ATF in the declared category would lead to uniform central sales tax of 3-4% against the current practice of local sales tax or value added tax (VAT) of up to 24%. The move will help ease the financial burden of airlines.
Singh rejected a proposal to regulate air fare, stating that overall costs have gone up ‘tremendously’. Singh said: “What we are trying to do is make the system for deciding the fares transparent. Public should know what the bucket system is and the range they have given should be reasonable."
State-owned oil marketing companies, which enjoy monopoly in the aviation turbine fuel market, are reluctant to share infrastructure with airline companies for importing fuel. In past several months, private airlines have had several meetings with the OMCs.
Singh also requested the oil ministry to give OMCs access to infrastructure to import oil by private airlines. “We will discuss the issue with the oil marketing companies,” Moily said.