Government to support oil marketing companies from impact of high crude prices: Sundareshan
31 Dec 2010
The petroleum secretary S Sundareshan yesterday said the government would support state-run oil marketing companies and shield consumers from the impact of surging international crude. He added the government would make up the losses of the oil marketing companies without asking domestic oil producers to share an additional burden.
He said that an impression seems to have been generated that since the EGoM (ministerial panel with powers of the full cabinet for a specific issue) had been postponed, the under-recoveries (of oil marketing firms) would be left unattended. He added that this was totally incorrect.
A ministerial panel meeting to review diesel and cooking gas pricing scheduled for yesterday was put off. The meeting was to be led by finance minister Pranab Mukherjee.
According to Sundareshan, the government would not ask oil producers ONGC or Oil India Ltd to share more than one third of the total losses run up by the oil marketing firms. Analysts say the statement would help remove any concerns over ONGC's valuation during its follow-on public offer in March.
Sundareshan said there was a subsidy-sharing mechanism in place with the upstream firms sharing 33 per cent of the oil marketers' under-recoveries and the government would not ask them for more.
Sundareshan added the centre would give cash for more than one-third of the losses but the actual amount would be decided at the end of the fiscal.
