New Delhi: The government on Wednesday agreed to give an additional Rs14,000 crore to oil retailers Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd to make up for most of the losses they incurred on selling cooking fuel below cost.
The three retailers lost Rs31,621 crore on selling domestic LPG (liquefied petroleum gas) and kerosene below cost in 2009-10. Of this, the finance ministry had previously released Rs12,000 crore in cash and, on Wednesday, agreed to give an additional Rs14,000 crore.
“We had sought Rs19,620 crore in compensation but they (finance ministry) have agreed to give Rs14,000 crore,” oil minister Murli Deora said.
Oil secretary S. Sundareshan met expenditure secretary Sushma Nath on Wednesday morning seeking Rs19,620.95 crore to fully compensate oil marketing companies’ revenue loss on PDS (public distribution system) kerosene and domestic LPG in 2009-10.
The three firms lost Rs46,051 crore on selling petrol, diesel, domestic LPG and PDS kerosene below imported cost in 2009-10.
He told Nath that upstream firms Oil and Natural Gas Corp. (ONGC) and Oil India Ltd are meeting the entire Rs14,430 crore loss on petrol and diesel.
Upstream firms, which are meeting 32% of the total revenue loss, cannot contribute anything beyond this, people familiar with the matter said on condition of anonymity.
“Upstream firms have done all they could and we cannot ask them to foot an additional Rs5,621 crore,” a ministry official said. “Perhaps this may have to be borne largely by the retailers, with upstream firms chipping in some.”
Indian Oil, Hindustan Petroleum and Bharat Petroleum currently lose Rs272.5 crore daily on selling fuel below cost and may end the current fiscal with a Rs90,150 crore revenue loss.
They currently sell petrol at a loss of Rs6.63 a litre while the loss is Rs6.25 per litre on diesel, Rs19.74 per litre on PDS kerosene and Rs254.37 per 14.2kg LPG cylinder.
An empowered group of ministers headed by finance minister Pranab Mukherjee is likely to meet next week to look into freeing auto fuel prices and ways of meeting the remaining revenue loss. Besides Mukherjee and Deora, the group also comprises agriculture minister Sharad Pawar, railways minister Mamata Banerjee, fertilizer minister M.K. Alagiri, road transport minister Kamal Nath and Planning Commission deputy chairman Montek Singh Ahluwalia.