New Delhi: The government will give Rs10,000 crore to state fuel retailers for selling fuel below cost in the first half of the current fiscal.
Indian Oil, Bharat Petroleum and Hindustan Petroleum lost about Rs31,600 crore in revenues on selling diesel, domestic LPG and kerosene below imported cost.
“Of this under recovery, the government will bear Rs10,000 crore,” an official said.
Upstream firms Oil and Natural Gas Corp (ONGC), Oil India and GAIL India will bear about Rs11,000 crore and the remaining revenue loss would be borne by the fuel retailers.
“Cash compensation will be released once the Parliament approves supplementary demands for grant in the coming winter session of Parliament,” he said.
The compensation is lower than Rs15,800 crore, or roughly half of the revenue loss, that oil ministry was seeking.
In the July-September quarter, ONGC will see its fuel subsidy bill climb by nearly 15% to Rs3,019 crore.
IOC, BPCL and HPCL together lost about Rs11,295 crore in revenues on selling diesel, domestic LPG and kerosene below cost of production in July-September quarter, he said.
“Of this under recovery, upstream companies like ONGC, Oil India and Gail India will bear one-third,” official added.
As per this subsidy sharing formula, ONGC will chip in with Rs3,019 crore by way of discount on crude oil it sells to IOC, BPCL and HPCL.
The subsidy outgo of ONGC will be Rs2,630 crore higher than last fiscal’s second quarter.
The official said OIL will pay Rs399 crore in subsidy during Q2 of this fiscal and GAIL Rs346 crore.
Of the Rs3,765 crore upstream subsidy contribution, IOC will get Rs2,135 crore, HPCL Rs808 crore and BPCL Rs821 crore.
While, petrol price was freed from the government control in June, state oil firms continue to sell diesel, domestic LPG and kerosene at government dictated price which is substantially lower than the cost of production.
IOC, BPCL and HPCL currently lose Rs2.01 per litre on diesel, Rs15.52 per litre on kerosene and Rs188.47 per cylinder on LPG.