Millennium Post

Govt subsidy of Rs 38,500 cr to oil firms for FY12

The government will dole out Rs 38,500 crore additional cash subsidy to public sector oil companies as part of compensation for selling diesel, domestic LPG and kerosene below cost in 2011-12 fiscal.

'Yes, the finance ministry has agreed to give Rs 38,500 crore compensation for the January-March quarter,' a top oil ministry official said.

The cash payout would be on top of Rs 45,000 crore that Indian Oil Corp (IOC), Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL) got for the first nine months of 2011-12 financial year.

The three firms had lost a record Rs 1,38,541 crore on selling diesel, domestic LPG and kerosene at government-controlled rates that were way lower than market price.
The government will make up 60 per cent or Rs 83,500 crore of the total revenue loss.

Upstream companies Oil and Natural Gas Corp (ONGC), Oil India and GAIL India have been asked to shell out an additional Rs 1,640 crore over the Rs 53,360 crore indicated earlier as their share of the subsidy burden.

The cash subsidy and assistance from upstream oil companies would bridge almost all of the Rs 138,541 crore of revenue loss, the official said. IOC is to declare its fourth and 2011-12 annual financial results on 28 May, while HPCL would do so on 29 May. BPCL has scheduled a board meeting for the results on 25 May.

ONGC, OIL and GAIL had in April-December 2011 contributed Rs 36,894 crore towards fuel subsidy and they would provide another Rs 18,106 crore in the fourth quarter.
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