Financial Daily from THE HINDU group of publications
Thursday, Apr 27, 2006
Financial Daily from THE HINDU group of publications Thursday, Apr 27, 2006 |
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Corporate
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Outlook Industry & Economy - Petroleum GAIL to fork out Rs 538 cr in Q4 towards subsidy sharing Richa Mishra
Bail-out package For fiscal 2005-06, GAIL share of the subsidy burden works out to Rs 1,064 crore GAIL does not share the subsidy burden for petrol and diesel It has made a representation to the Ministry that it be exempted from sharing kerosene subsidy Upstream companies contribute one-third of the total under-recoveries of the OMCs Ministry is looking at fresh additional support of Rs 801.84 crore from upstream companies
New Delhi , April 26 To bail out the bleeding oil marketing companies, the gas transmission company, GAIL (India) Ltd, will have to shell out Rs 538 crore towards subsidy burden sharing for the fourth quarter of the 2005-06 fiscal. This would be significantly higher than the Rs 206 crore forked out by the company for the third quarter of the year. To compensate the OMCs for the under-recoveries incurred by them for selling petroleum products — petrol, diesel, LPG and kerosene — at low prices, the Ministry of Petroleum and Natural Gas has worked out a subsidy-sharing formula for upstream companies, including ONGC, Oil India Ltd and GAIL. For the entire fiscal 2005-06, GAIL's share of the subsidy burden works out to Rs 1,064 crore. According to a senior company official, on a year-on-year basis (FY 2005-06 over FY 2004-05), there has been no increase in subsidy burden sharing. In fact, GAIL's subsidy share has decreased from Rs 1,137 crore in 2004-05 to Rs 1,064 crore in 2005-06. GAIL does not share the subsidy burden for petrol and diesel. Also, GAIL has again represented to the Ministry that since it deals only with LNG and not with kerosene, it should be exempted from sharing the kerosene subsidy, the official told Business Line. However, the company's argument is yet to find acceptance, he added. The fourth quarter figure of Rs 538 crore decided by the Ministry includes kerosene subsidy also, the official said. The Ministry is working out a package to bail out OMCs such as Hindustan Petroleum Corporation and Bharat Petroleum Corporation so that they do not post losses in 2005-06 due to spiralling international crude prices and selling products below cost. Under the existing mechanism, the upstream companies contribute one-third of the total under-recoveries of the OMCs, at Rs 39,594.47 crore, in 2005-06. Under this formula, upstream assistance works out to be Rs 13,198.16 crore.
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