Producers told to pay Rs10,896 cr towards oil subsidies

The government has asked oil producers to provide Rs10,896 crore ($1.8 billion) in subsidies to cover some of the losses of retailers who are obliged to sell fuel at subsidised rates, according to a Reuters report citing sources.

In addition, the union finance ministry has agreed to support the retailers with a Rs5,085 crore rupee subsidy for the December quarter, according to the government source.

India regulates retail prices of liquefied petroleum gas and kerosene as well as diesel.

State-run producers Oil and Natural Gas Corp, Oil India Ltd and GAIL (India) sell crude and related products at a discount to the retailers, who also get cash subsidies from the government for selling fuel at below-market rates.

The source said three fuel retailers - IOC, Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) had suffered a revenue loss of Rs15,981 crore rupees during the quarter.

IOC, the country's biggest refiner and fuel retailer, will get a subsidy of Rs8,982 crore, while HPCL will get Rs3,586 crore and BPCL Rs3,413 crore, the Reuters source said.

''ONGC will pay a subsidy of Rs9,458 crore while Oil India's share is pegged at Rs1,438 crore rupees. We have exempted GAIL from paying the subsidy during the quarter,'' the source said.