The Hindu Business Line : ONGC to bear subsidy bill of Rs 2,000 cr

THE Government has recently decided that Oil and Natural Gas Corporation (ONGC) will bear a subsidy of around Rs 2,000-crore this fiscal on account of sale of kerosene and LPG by public sector petro-marketing companies.

This is a follow up of the recent Cabinet decision to freeze the consumer price of LPG and kerosene this fiscal and split the annual Rs 8,000 crore subsidy bill amongst companies in the oil sector. It was left to the Petroleum Ministry to work out the details of the decision.

The Ministry has decided that while ONGC will bear around Rs 2,000 crore, GAIL (India) Ltd will bear around Rs 350 crore and Oil India Ltd around 50 crore during the entire fiscal. Together, they add up to around Rs 2,400 crore.

Another Rs 2,300-odd crore will be borne by the oil marketing companies and an equal amount will be raised through hikes in petrol and diesel prices.

It is estimated that the decision to impose a subsidy bill of Rs 2,000 crore will mean that ONGC will receive an average price equivalent to the market price minus $2 on every barrel of crude sold to the domestic refiners through the year. On the other hand, while Indian Oil Corporation will receive a little more than Rs 1,000 crore, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd will net over Rs 500 crore apiece.

The Government has decided that stand-alone refineries will not be burdened with the subsidy bill.

The main gainers from the decision to limit the subsidy burden are Reliance Industries Ltd's 27-million tonne refinery in Jamnagar, Kochi Refineries Ltd, Numaligarh Refineries Ltd and Bongaigaon Refineries and Petrochemicals Ltd (BRPL).

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