Public sector OMC recoveries to fall short by Rs45,478 crore

According to projections PSU oil marketing companies' (OMCs) recoveries will fall short by Rs45,478 crore on retail sale of petrol, diesel, domestic cooking gas and kerosene during 2009-10, based on refinery gate prices in the first fortnight of December.

This is lower than the under-recoveries of Rs85,000 crore incurred by OMCs in 2008-09 which resulted from the higher crude oil prices of $80 a barrel. The current price of the crude basket is $71.43 a barrel (157.5 litres to a barrel).

While chairing a meeting in New Delhi on Thursday, petroleum minister, Murli Deora said the oil marketing companies "incur under-recoveries of Rs3.10 per litre of petrol, Rs2.55 per litre of diesel, Rs17.30 per litre of kerosene and Rs241 on each 14.2-kg cylinder" of cooking gas in Delhi.

He said that when global oil prices touched record peaks during the last financial year, the oil companies had received financial support of Rs106,000 crore from the government. He added that that kind of subsidy was not sustainable in the long run.

Meanwhile, the expert group formed to suggest a sustainable pricing policy, is expect to submit its report in January, based on which the government will consider suitable pricing policy initiatives, Deora said.

He added the government was in the process of working out a new subsidy formula to replace the current system of compensating the oil marketing companies (OMCs) for selling below cost through oil bonds.