Opposing any move to hike petrol prices, the CPI-M on Wednesday asked the government to impose a 'windfall profit tax' on private and JV oil firms as well as private refineries and not burden the common people.

"In no case can the UPA government pamper the private oil companies to make windfall profits and, at the same time, increase the price of petrol and diesel and burden the people further when they are suffering from steep price rise of essential commodities," the CPI-M Politburo said in a statement.

It recommended the imposition of 'windfall profit tax' on private and joint venture oil producing firms as well as private standalone refineries "earning huge profits through import parity policy of pricing."

With crude prices exceeding $100 per barrel, "it is necessary that windfall gains be recovered from all private and joint venture oil producing companies like M/S Cairns, Reliance, Essar etc extracting oil and gas in India," the statement said.

It added that when these contractors participated in the New Exploration Licensing Policy, "none of them could have envisaged crude prices beyond $30 a barrel."

"It would be a failure on government's part to allow upstream contractors additional gain of $70-$80 per barrel without any extra work," the party said, adding that many other countries had "renegotiated their contracts with a threat of imposing windfall taxes on such profits."

"It is time that the government takes charge and recovers unintended gains from upstream contractors," it added.

The CPI-M said that private refineries were allowed "to keep margins for refining cost exceeding $15 per barrel, while public sector firms struggled to meet their financial needs".

Pointing out that refineries like Reliance that exported a major part of its products increasing its profits by 26 per cent in October-December 2007 and 35 per cent in January-March 2008, it said, "by design, the government has dragged down the public sector companies while private firms have been allowed to flourish."

It said it was necessary that 'windfall profit tax' be imposed on private refineries "who do not contribute to meet the oil subsidy bill."

Alongside, the party asked the government to scrap the customs duty on crude from the 5 per cent at present, saying the duty collected on this account was "likely to be more than Rs 15,000 crore" which, if nullified, would give considerable relief to the oil manufacturing firms.

It also wanted government to create a Price Stabilization Fund by using the money collected out of the oil cess, which, it said, would amount to over Rs 7,500 crore.

US example

The major Left party also sought reduction in excise duty on oil products.

Recently, in a letter to Prime Minister Manmohan Singh, CITU President M K Pandhe had demanded imposition of windfall tax, quoting US Senators Patrick J Leahy and Richard Durbin for stressing the need to impose such a tax on the windfall profits earned by American oil firms.

"You will agree that if the US Senate Committee can call for a control on super profits of private oil giants in the land of so-called free-market economy, there is no reason why India with millions of people under poverty line cannot curb such super profits earned by foreign and domestic private oil companies on Indian soil," Pandhe had told the Prime Minister.

The CPI-M Politburo said the US government had levied such a tax on oil companies in 1980 on the profits they earned due to the Arab oil embargo.

While the Ronald Reagan Administration ended the tax in 1988, a Democratic Senator introduced a legislation on May 7 this year to create a tax on 'windfall profits' on major oil companies.