New Delhi: India may consider cutting the fuel subsidies borne by Oil and Natural Gas Corp. Ltd (ONGC), the country’s biggest explorer, and monopoly gas supplier GAIL (India) Ltd to help boost their earnings, after global crude-oil prices slumped.

Easing pressure: Oil secretary R.S. Pandey says the?proposal to cut oil explorers’ share of the subsidies given to refiners is under scrutiny. Sanjit Das / Bloomberg

State-run petroleum explorers including ONGC shoulder part of the subsidies paid to refiners selling oil products at below cost to curb inflation. Crude’s 71% plunge in New York from its July record prompted India to lower retail fuel prices on 6 December for the first time since February 2007, and may give the government room to reduce the overall subsidy burden.

The subsidies eroded ONGC’s profit in the quarter ended September as payouts reached Rs12,660 crore in the three-month period, chairman R.S. Sharma said on 30 October. Earnings would have been higher by Rs7,070 crore had the company not paid the subsidy, Sharma said.

Refiners may lose revenue of as much as Rs1.1 trillion in the year ending March after selling fuels at below cost, Pandey said on 26 November. Falling crude prices have been offset by the declining Indian rupee, making it costlier to import oil.

India’s wholesale prices increased 6.84% in the week to 6 December from a year ago, the slowest since early March, as demand slowed amid the global economic slowdown.

Oil minister Murli Deora declined on Monday to comment on any plan to further cut retail fuel prices.

Asia’s third biggest energy consuming nation plans to call for bids from overseas and Indian companies for an eighth round of auctions in February to explore oil and gas areas, said V.K. Sibal, director general of hydrocarbons. India is offering at least 100 areas for exploration in the next round to help reduce dependence on oil imports, Sibal said.