OilMin seeks Rs 28,000 cr cash subsidy for H1

New Delhi: The Oil Ministry has asked for a cash subsidy of over Rs 28,000 crore from the Finance Ministry to partially compensate state-owned oil firms for losses they incurred on selling fuel below cost in the first half this fiscal.

“Oil marketing companies (OMCs) have reported an under-recovery (revenue loss) of Rs 21,374 crore in the July-September quarter,” Oil Secretary G C Chaturvedi told reporters here. Of this, one-third, or Rs 7,124 crore, would be made good by upstream firms like Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL).

“For the rest Rs 14,250 crore, we have asked the Finance Ministry to give cash subsidy,” he said.

[caption id=“attachment_121602” align=“alignleft” width=“380” caption=“Chaturvedi said his ministry had asked for a Rs 29,000 crore cash subsidy for Q1, but got only Rs 15,000 crore.Reuters”]  [/caption]

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Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) lost Rs 43,526 crore in the April-June quarter on selling diesel, domestic LPG and kerosene at government-controlled rates, which are way below cost.

Chaturvedi said his ministry had asked for a Rs 29,000 crore cash subsidy for Q1, but got only Rs 15,000 crore.

“We continue to seek the Rs 14,000 crore unmet demand of the first quarter. Together with Rs 14,250 crore of Q2, our demand is for Rs 28,000 crore for the first half of the current fiscal,” he said.

In the April-September period, the three firms lost Rs 64,900 crore on selling the three fuels below cost.

The three firms are losing Rs 333 crore per day on selling diesel, domestic LPG and kerosene below cost. They lose Rs 9.27 per litre of diesel, Rs 26.94 per litre of kerosene sold through the public distribution system (PDS) and Rs 260.50 per 14.2-kg LPG cylinder supplied to domestic households for cooking purposes.

For the full fiscal, the three firms are projected to lose Rs 1,21,459 crore. “Financial condition of oil companies is very fragile… We have been pleading for higher government compensation to the oil marketing companies,” he said.

The Oil Ministry, he said, wanted the upstream share to be limited to the historic one-third, or 33.33 percent, of the total under-recovery or revenue loss.

The Finance Ministry, however, wants the contribution by ONGC, OIL and GAIL India to increase to at least 50 percent. In Q1, ONGC, OIL and GAIL bore roughly one-third of the Rs 43,526 crore under-recovery of the state-run oil marketing companies. The government agreed to give about Rs 15,000 crore and the rest was absorbed by the retailers.

Of the Rs 14,508.83 crore provided by upstream firms, ONGC gave Rs 12,046.26 crore, Oil India Rs 1,780.65 crore and GAIL India Rs 681.92 crore.

The fuel retailers lost Rs 37,719 crore on the sale of diesel, Rs 13,361 crore.

PTI