Companies

Subsidy groan for ONGC and Oil India in 2013-14

Anand Kalyanaraman BL Research Bureau | Updated on February 18, 2014 Published on February 18, 2014

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ONGC’s share of the subsidy burden in 2013-14 is likely to touch 34 per cent from 31 per cent last year, while Oil India’s share may go up to 5.5 per cent from 5 per cent.





Upstream oil companies ONGC and Oil India are likely to bear more of the petroleum subsidy burden in 2013-14 than initially estimated.

This is because the Government has restricted its share of the burden to 60 per cent, the oil marketing companies (Indian Oil, HPCL and BPCL) are not likely to contribute, and GAIL’s burden has been capped.

At ₹85,480 crore, the revised estimate of the Government’s petroleum subsidy for 2013-14 works out to 60 per cent of the total estimated petroleum subsidy for the year (₹1,43,000 crore). This is the same proportion as last year.

Due to the rupee’s weakness since June, under-recoveries on fuel sales have been significantly higher than envisaged at the beginning of the fiscal. The oil marketing companies, which incur the under-recoveries in the first place, are likely to be spared from subsidy sharing to prevent them from slipping into losses.

Ergo, the remaining 40 per cent of the burden, once again, will fall on the upstream companies (ONGC, Oil India) and GAIL. But GAIL’s burden for 2013-14 has been restricted to ₹1,400 crore. This means more burden on ONGC and Oil India.

ONGC’s share of the subsidy burden in 2013-14 is likely to touch 34 per cent from 31 per cent last year, while Oil India’s share may go up to 5.5 per cent from 5 per cent.

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Published on February 18, 2014
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