Pranab ready to subsidise oil marketing companies further

Finance minister Pranab Mukherjee hinted that the government was ready to shell out a higher subsidy for petroleum products to shield consumers as international prices of crude oil shot past $100 a barrel.

"Unfortunately, the developments in the Middle East and their impact on the Arab world are causing uncertainty about the production and availability of oil. We are closely watching the situation," Mukherjee said on Wednesday.

"The finance ministry was in constant touch with the petroleum ministry on the unfolding situation. At the same time, when crude oil touched $147 a barrel in July 2008 also, we had to manage the situation. Government will take care of it," Mukherjee added.

The government had in 2008-09 provided as much as Rs71,292 crore as subsidy to oil marketing companies on petrol, diesel, LPG and kerosene sales out of the Rs103,292 crore total revenue that the public sector companies lost on selling these fuels below market prices.

In the current financial year, the public sector oil companies anticipate losing Rs75,600 crore in revenues, estimated at crude prices of around $90 a barrel.

However, the government has so far sanctioned only Rs21,000 crore fuel subsidy for the first nine months, of which the oil marketing companies still have to receive Rs8,000 crore in cash.