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Govt raises fuel subsidy; load on ONGC to be 4.5% heavier

Fuel retailers Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) sell diesel, domestic LPG and kerosene at government controlled rates which are lower than cost. The loss they thus make are compensated through a combination of government cash subsidy and upstream dole.

During April-June, the three fuel retailers lost Rs 28,690.74 crore on the three fuel. Of this, the upstream firms ONGC, Oil India Ltd (OIL) and GAIL have been asked to meet Rs 15,546.65 crore or 54 per cent of the under-recovery or revenue loss. ONGC has been asked to chip in Rs 13,200.10 crore, official sources said. This is 4.5 per cent higher than Rs 12,622 crore it had paid in first quarter of previous fiscal.

OIL has been asked to provide Rs 1,846.55 crore while the share of gas utility GAIL has been fixed at Rs 500 crore. The government is yet to announce its cash subsidy for the first quarter.

Sources said out of the upstream dole, IOC will get Rs 8,107.21 crore, BPCL Rs 3,830.56 crore and HPCL Rs 3,608.88 crore. Of the Rs 28,690.74 crore revenue loss in April-June, fuel retailers lost Rs 12,129 crore on domestic LPG, Rs 9,037 crore on diesel and Rs 7,524 crore on kerosene sold through PDS.

Oil firms are currently losing Rs 2.49 a litre on diesel, Rs 33.07 on PDS kerosene and Rs 449.17 crore on domestic LPG, they said adding at the current rate the three firms are likely to end the fiscal with an under-recovery of Rs 98,345.55 crore. Sources said IOC lost Rs 15,328.34 crore on sale of the three products in the first quarter, HPCL Rs 6,620.01 crore and BPCL Rs 6,742.39 crore.

Last fiscal, oil firms had lost Rs 139,869 crore on sale of diesel, public distribution scheme (PDS) kerosene and domestic LPG.
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