Patna,(BiharTimes): Widespread anger prevails among consumers, common citizens and Bihar Petroleum Dealers’ Association (BPDA) over the state government’s decision to impose Rs 1.76 surcharge on petrol. Ironically the Nitish government’s decision to impose surcharge came only days after the oil companies cut the prices by Rs three across the country.

Normally Bihar government is the first to criticize any hike in petrol prices by oil companies.

Opposition RJD strongly protested the hike in price and its youth wing members took to streets and burnt the effigy of chief minister Nitish Kumar near Dak Bungalow roundabout on Sunday.

A decision to impose 10 per cent surcharge on value-added tax (VAT) on petrol came at a cabinet meeting on May 7.

Thus the oil price has risen to Rs 68.94 a litre from midnight on Saturday. Petrol is now costlier in Bihar than Jharkhand by Rs 6.50 and diesel Rs two.

Incidentally, on May 7, while imposing a 10 per cent surcharge on petrol on the existing VAT rate of 24.5 per cent, deputy chief minister Sushil Kumar Modi had assured that it would not be passed on to the consumers. But he is still to commented on the issue. Now VAT is back to 27 per cent, that is, back to 2009 rate.

Thus the state’s VAT collection on petro products has risen from Rs 1,213 crore in 2007-08 to Rs 2,528 crore in 2011-12. In fact, petroleum products account for almost 30 per cent of the commercial tax collected in Bihar. The state sells around 5.5 lakh kilolitres of petrol annually.

According to an oil company official “the profit earned by the state government for sale of every litre of petrol is over Rs 18.” He pointed out that Bihar not only levied entry tax on petrol entering the state, but also on crude oil––at 10 percent of crude oil prices––entering through the Haldia-Barauni pipeline at Barauni.

RJD secretary general and Rajya Sabha member Ram Kripal Yadav held both the Centre and state government responsible for the hike in oil prices. He said that the latest hike would upset the family budget as it would affect the prices of other items. He asked the Nitish government to immediately withdraw the surcharge.

On the other hand BPDA president Prabhat Kumar Singh said that after the 10 per cent surcharge differentials between Bihar and its neighbouring states, like Jharkhand and Uttar Pradesh, have forced bulk users, like construction and other companies, and vehicle users on long journey, to purchase diesel and petrol from neighbouring states, where they are priced low.

"The price of petrol is Rs 6.50 less per litre in Jharkhand and of diesel Rs two per litre compared to Bihar. It would hit the state’s revenue collection and thus the surcharge should be withdrawn," he demanded.