Millennium Post

FinMin gives `10,000 crore as Q3 subsidy to fuel retailers

The Finance Ministry on Tuesday sanctioned Rs 10,000 crore as cash subsidy to fuel retailers like Indian Oil Corp (IOC) to make up for part of the losses they incurred on selling diesel and cooking fuel below cost in December quarter. ‘Finance Ministry has sent a letter sanctioning Rs 10,000-crore 3rdquarter fuel subsidy,’ an official said.

The sanction is against Oil Ministry's demand of Rs 26,000 crore. IOC will get Rs 5,172.87 crore while Bharat Petroleum Corp Ltd (BPCL) will get Rs 2,499.39 crore. Hindustan Petroleum Corp Ltd (HPCL) will get Rs 2,327.47 crore. Fuel retailers lost Rs 39,725 crore on selling diesel, kerosene and domestic cooking gas (LPG) at government controlled rates in October-December 2013. Upstream companies Oil & Natural Gas Corp and Oil India Ltd will make good Rs 15,937.59 crore, or about 40 per cent, of this amount.

Without the government subsidy, state-owned fuel retailers Indian Oil Corp (IOC), HPCL and BPCL will report losses in the third quarter. BPCL results are due on Wednesday, followed by IOC on 13 February. Fuel retailers sell diesel and cooking fuel at rates below the cost of production. The losses they incur are met by way of cash subsidy and support from upstream firms.

The government provided Rs 17,772 crore of cash subsidy in the first half of the current financial year. During April-September, IOC, BPCL and HPCL together lost Rs 60,907 crore in revenue on selling diesel and cooking fuel. Of this, ONGC made good Rs 26,417.82 crore, OIL Rs 4,215.76 crore and GAIL Rs 1,400 crore.
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