The Hindu Business Line : Oil PSUs to continue sharing subsidy burden

The subsidy sharing arrangement between the various stakeholders in the oil sector may have to continue during 2006-07, the Petroleum Ministry has said. In the outcome budget 2006-07, the Ministry said that the arrangement may be necessary till prices of domestic liquefied petroleum gas (LPG) and kerosene sold under public distribution system are market-driven.

The Ministry hopes to deliver domestic LPG and PDS kerosene to households across the country at affordable prices during 2006-07.

It plans to make available 118 lakh kl of PDS kerosene and 74.42 crore domestic LPG cylinders to households at subsidised prices.

The Ministry also said that since the prices of petroleum products are linked to international prices, any increase in international prices further would increase the subsidy burden on state-owned oil companies.

Freight subsidy

As regards freight subsidy on retail products for far-flung areas, the Ministry has indicated that this subsidy may continue, as any increase in transportation cost would increase the freight subsidy burden on the oil public sector undertakings. It proposes to make available 6 lakh kl of PDS kerosene and 2.6 crore LPG cylinders for domestic use in the far-flung areas of the country at a uniform price.

Supply to N-E region

On the issue of compensation to state-owned oil companies for supply of natural gas to the north-eastern region, the Petroleum Ministry has said that it proposes to make 4 million standard cubic metre per day (MMSCMD) of natural gas to the customers in the region at a concessional price of Rs 1,925 per MMSCM as compared to Rs 3,200 per MMSCM for the rest of the country.

Through this arrangement, various customers in that region get natural gas at concessional prices enabling overall economic development, it has said, adding that it involves an outlay of Rs 150 crore.