Oil firms to pay Rs30,297 crore subsidy to retailers

Oil firms to pay Rs30,297 crore subsidy to retailers

New Delhi: Indian upstream firms will compensate state-run fuel retailers for about 38.7% of their revenue losses on subsidized sales in the last fiscal year versus 33.33% earlier, an industry source said on Friday.

Upstream companies and explorers -- Oil and Natural Gas Corp, Oil India Ltd and GAIL -- have to sell crude oil and products at a discount to retailers, which sell fuel at government-capped prices.

Indian state-run upstream firms will give a total discount of about Rs30,297 crore ($6.74 billion) to retailers on fuel sales in the fiscal year to March 2011, the source, who did not wish to be identified, said.

ONGC and OIL’s subsidy burden for 2010-11 would be more than double that of 2009-10. Shares in the oil companies were down 1-2%.

For 2010-11, ONGC would give a subsidy of about Rs24,892 crore versus Rs11,554 crore a year ago and OIL’s share stood at about Rs3,293 crore, against 14.90 for 2009-10.

The subsidy payout by GAIL for the last fiscal year would be Rs2,111 crore against Rs1,327 crore of 2009-10.

At 12:32 pm, ONGC shares were down 2.2% at Rs271.40, Oil India shares were down 2.1% at Rs1,303, while GAIL shares were down by 1.4% at Rs422.50.