IOC to hike fuel prices in UP to cover the entry tax burden

Indian Oil Corporation (IOC), the state owned petroleum company, will be hiking fuel prices in Uttar Pradesh (UP), if its chief minister, Akhilesh Yadav, continues to place the burden of entry tax on the company, which weigh down approximately Rs 8600 on the cash strapped firm. However, the company is also planning to hike the prices of petroleum products sold to neighboring states from Mathura refinery.

The company may raise petrol and diesel prices by more than Rs 2 a litre, kerosene by Rs 0.92 a litre and cooking gas by Rs 19.49 per cylinder in the state. The increase is partly to pass on the entry tax to customers and partly to recover dues accumulated in the last five years.

In 2007, the UP government imposed 5% tax on transporting crude oil to IOC's Mathura refinery but the tax was not passed on to customers because of a stay order from the Allahabad high court. In January 2012, an interim order of the Supreme Court directed the company to pay the tax and deposit 50% of the past dues with interest, pending a final verdict. IOC ideally wants the state government to withdraw the tax, which would cost it Rs 1,650 crore annually.