The Hindu Business Line : Subsidy burden: Oil cos to cough up Rs 3,274 cr for Q3 — Ministry continues with previous quarter's formula

THE upstream oil companies — Oil and Natural Gas Corporation, GAIL (India), and Oil India Ltd — will have to cough up Rs 3,274 crore as part of the subsidy burden for the third quarter of the current fiscal.

According to sources, the Petroleum Ministry has asked ONGC to shell out Rs 2,843 crore. While GAIL has been asked to share a subsidy of Rs 206 crore for the quarter, Oil India has been asked to give Rs 225 crore. Sources told Business Line that the Ministry has continued with the same formula that was applied in the last quarter. From the Rs 3,274 crore, the Indian Oil Corp-IBP combine is to get the largest share of Rs 1,865 crore. Bharat Petroleum would be getting Rs 725 crore and Hindustan Petroleum Corporation would get Rs 684 crore. The Government's letter to the upstream companies, for sharing under recoveries suffered by the oil marketing companies (OMCs) because of selling petroleum products below cost, was sent on Friday.

For the second quarter of 2005-06, while ONGC's share of the subsidy burden stood at about Rs 2,830 crore, GAIL had to bear a subsidy burden of Rs 167 crore on sale of cooking gas and kerosene by oil marketing companies. According to GAIL, its share of the subsidy for the third quarter of the current fiscal was 44 per cent lower than its share of Rs 369 crore during the corresponding period of the previous financial year. In fact, the cumulative subsidy share of GAIL for the nine-month period of the current financial year is Rs 526 crore.

Meanwhile, ONGC's share of the subsidy bill stood at Rs 5,706 crore during the first half of 2005-06, which was higher than the total subsidy bill of Rs 4,104 crore paid by the company for the full year of 2004-05. ONGC has been seeking a transparent policy on subsidy sharing by the Government in order to enable the upstream companies to work out their financial commitments without any uncertainty.