Oil PSUs to get Rs25,000 crore more for fuel subsidy

The finance ministry has issued a 'comfort letter' providing for Rs25,000 crore additional cash subsidy to state-run oil marketing companies (OMCs) for selling diesel, domestic LPG and PDS kerosene at controlled prices.

The three OMCs – Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation – have so far received Rs25,000 crore as subsidy compensation for the first six moths of the current fiscal and are seeking Rs25,000 crore more for the revenue loss incurred by them during the first half of the fiscal.

Out of this Rs25,000 crore additional subsidy grant Indian Oil Corporation would get Rs13,474.56 crore, Bharat Petroleum Rs5,987.25 crore and Hindustan Petroleum Corporation Rs5,538.19 crore.

For the first six months of the financial year the government owed the OMCs around Rs85,600 crore as compensation, of which upstream companies (ONGC, Oil India and GAIL) met 30,000 crore each.

This leaves an unmet portion of Rs25,600 crore due for the first half of the fiscal and another Rs25,000 crore for the third quarter of the financial year 2012-13.

For the full fiscal the OMCs are expected to report losses to the tune of Rs1,61,607 crore for selling petroleum products at controlled price.

However, the OMCs may have to wait till Parliament approves the supplementary demands for grants to receive the Rs25,000 crore promised by the finance ministry for the fiscal first half.