The Hindu Business Line : ONGC, GAIL, OIL to share Rs 6,000 cr of Q2 burden

Burdening fact
The under-recoveries of oil marketing cos on LPG, PDS kerosene, petrol, diesel for Q2 is expected to be Rs 17,123 crore.
ONGC is likely to contribute Rs 5,057 crore, OIL Rs 581 crore and GAIL Rs 362 crore.

New Delhi , Aug. 15

Oil and Natural Gas Corporation, GAIL (India), and Oil India Ltd may find themselves forking out close to Rs 6,000 crore for the second quarter this fiscal as part of burden-sharing arrangement worked out by the Government.

As per the estimates, the under-recoveries of oil marketing companies on domestic liquefied petroleum gas (LPG), kerosene sold under public distribution system, petrol and diesel for the second quarter of 2006-07 are expected to be Rs 17,123 crore.

This is despite the price hike on petrol and diesel on June 5 by Rs 4 and Rs 2 respectively. Out of the estimated under-recoveries of Rs 17,123 crore, the upstream oil companies are expected to share the burden of about Rs 6,000 crore.

Apart from this, the upstream companies will continue to provide discounts to the refiners. This follows a Cabinet decision that had said that they will take a subsidy burden of Rs 24,000 crore in the full year.

The Indian crude basket on August 11 was at $72.77 per barrel, and the average from July 28 to August 10 was $73.27 per barrel.

The under-recoveries on petrol during the second quarter (July-September 2006) are expected to be Rs 1,292 crore, on diesel Rs 7,610 crore,on PDS kerosene Rs 5,398 crore and on LPG Rs 2,823 crore, as per the estimates.

Official sources told Business Line that discounts on account of subsidy sharing is mostly announced during the middle of the relevant quarter. The burden sharing for the second quarter is expected to be close to what the upstream companies gave in the first quarter of the current fiscal (Rs 6,000 crore).

However, there might be a slight variation in the contributions made by each upstream company, sources said.

The share of under-recoveries between upstream oil companies has been apportioned in the ratio of profit after tax for 2005-06, the same basis as last year.

The share of petrol and diesel under-recoveries has been allocated to only ONGC and OIL, while on kerosene and LPG, allocation has been done between ONGC, OIL and GAIL, sources added. ONGC is expected to take the maximum burden and likely to contribute Rs 5,057 crore (Rs 5,120 crore inQ1), OIL may have to fork out Rs 581 crore (Rs 588 crore) and GAIL Rs 362 crore (Rs 292 crore).

Of this, Rs 6,000 crore, Indian Oil including IBP Co is likely to get the largest share of the pie with Rs 3,389 crore (Rs 3,383 crore in Q1). Bharat Petroleum is expected to get Rs 1,375 crore (Rs 1,380 crore) and Hindustan Petroleum Rs 1,236 crore (Rs 1,237 crore).

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