Millennium Post

Centre puts poor kerosene buyers at mercy of market

The government has amended the Kerosene (Restriction on Use and Fixation of Ceiling Price) Order, 1993, to free all activities of storage, transportation and sale of white kerosene (market-priced kerosene or non-PDS kerosene) from regulatory control, an official statement said here. Subsidised kerosene sold through public distribution system (PDS) is blue in colour while the market priced fuel is colourless.

“It is expected that this will reduce demand for diverted PDS kerosene by improving availability of non-PDS kerosene in the open market and will thus meet the demand of kerosene for various legitimate end uses for the industry and for individual consumption by those who can afford it at market price,” the statement said.

While PDS kerosene is priced at Rs 15.14 per litre, the non-subsidised or market-priced fuel comes for Rs 27.68 a litre. “In this regard, the Kerosene (Restriction on Use and Fixation of Ceiling Price) Amendment Order, 2015 has been published in the Gazette of India vide GSR.41 (E) dated January 19, 2015,” it added.

Last week, the Oil Ministry sought Rs 22,101 crore in subsidy to cover for losses on LPG and kerosene sale in the second half of current fiscal so as to almost exempt oil producer ONGC and Oil India Ltd from any payments.

The government has this fiscal so far provided Rs 17,000 crore or one-third of the losses that fuel retailers incurred during April-September. Oil and Natural Gas Corp (ONGC) and OIL chipped in Rs 31,926 crore.

But with global oil prices slipping below economical price of $50 per barrel, the ministry wants to exempt the upstream producers from payment of any further subsidy during the remainder of current fiscal, official sources said.

The ministry has written to the finance ministry seeking Rs 22,101 crore for covering most of the revenue loss on LPG and kerosene sale during October-December. Diesel was deregulated in mid-October and as such there is no subsidy on it in the second half. Under-recoveries or revenue retailers lose on selling fuel below cost, is projected at Rs 74,773 crore in full 2014-15 fiscal.

Out of this, Rs 51,109.53 crore was in first half, which was met by Rs 17,000 crore in government subsidy and ONGC paying Rs 26,841 crore. OIL paid Rs 4,085 crore and gas utility GAIL paid Rs 1,000 crore.

The ministry has put the under-recoveries in October-December quarter at Rs 15,981.28 crore and Rs 7,682 crore in the fourth quarter.
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