Oil firms get `15k cr fuel subsidy
New Delhi 19-Nov-2011

THE Finance Ministry has sanctioned an additional `15,000 crore to partially compensate state-owned oil firms for losses they incur on selling fuel below cost.

"The Ministry of Finance has sanctioned an additional compensation of `15,000 crore on November 11," a top Oil Ministry official said, adding this compensation is over and above `15,000 crore sanctioned for meeting losses of first quarter ending June 30. Oil marketing companies (OMCs) have reported an under- recovery (revenue loss) of `21,374 crore in the July- September quarter. Of this, one-third or `7,124 crore, would be made good by upstream firms like Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL).

The Finance Ministry was asked to make good the rest `14,250 crore.

"The Finance Ministry has issued the sanction letter and the actual cash would be given the oil companies after the Parliament approves supplementary demands for grants in the winter session of Parliament beginning November 22," he said.

IndianOil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) had lost `43,526 crore in April-June quarter on selling diesel, domestic LPG and kerosene at Government controlled rates which are way below cost. The Oil ministry had asked for `29,000 crore cash subsidy for Q1 but got only' 15,000 crore. In the April-September period, the three firms lost `64,900 crore on selling the three fuels below cost. The three firms are currently losing` 11.44 per litre on diesel, `26.94 per litre on kerosene sold through the public distribution system (PDS) and `260.50 per 14.2-kg LPG cylinder supplied to domestic households for cooking purposes.

No hike in diesel, LPG prices

Already at the receiving end of political backlash after the petrol price revision, the Government is not looking at raising prices for now of subsidised diesel, kerosene and cooking LPG despite oil PSUs losing a record `360 crore per day.

A top oil ministry official said it will be "suicidal" to even think of raising prices of diesel, LPG or kerosene just before Parliament is to meet or even during the one-month long session. The winter session of Parliament begins on Tuesday.

The Ministry, which had given oil firms a tacit approval for the November 4 hike in petrol price by `1.80 per litre, was taken by surprise by the criticism revision in price of a commodity that was decontrolled or freed from Government control generated. It was even more astonished when the November 16 reduction in petrol price by `2.22 a litre in line with falling global oil rates, was not praised but criticised as a decision taken for political considerations.

"Both decisions were dictated by economic considerations - the hike because of fall in rupee and reduction because of dip in international oil prices," the official said but agreed that the political backlash could have been avoided if the oil companies had waited for few more days before raising rates. Oil companies pressed for a hike as they were losing `1.52 a litre on petrol (excluding local sales tax) because of weakening rupee. But had they shown little more patience, the loss would have been more than neutralised by the `1.85 per litre gain they made because of fall in global oil rates in next 10 days.

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In no event will IndianOil be liable for damages of any kind, including without limitation, direct, incidental or consequential damages (including, but not limited to, damages for lost profits, business interruption and loss of programs or information) arising out of the use of or inability to use IndianOil's website, or any information provided on the website, or in the Products any claim attributable to errors, omissions or other inaccuracies in the Product or interpretations thereof. Some jurisdictions do not allow the limitation or exclusion of liability. Accordingly, some of the above limitations may not apply to the User.
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