The government will pay Rs 25,000 crore additional cash subsidy to state-owned fuel retailers to cover for the revenue they lost on selling auto and cooking fuel below cost this fiscal.
The Finance Ministry has so far provided Rs 55,000 crore to Indian Oil Corporation (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) to cover for part of the revenue they lost on selling diesel, domestic LPG and kerosene at government controlled rates which are way below the cost.
“Another Rs 25,000 crore is likely to come next month,” Oil Secretary Vivek Rae said here.
The three firms are together projected to end the 2012—13 fiscal with a under—recovery or revenue loss of Rs 161,343 crore on sale of diesel and cooking fuel. Of this, about Rs 60,000 crore is to be made good by upstream firm ONGC.
After accounting for the Rs 25,000 crore expected, the total government cash subsidy would come to Rs 80,000 crore.
“There (would) still be Rs 21,000 crore—odd uncovered under—recovery which will be carried forward in the next fiscal,” he said.
Speaking at the National Editors’ Conference, Oil Minister M Veerappa Moily said the government is committed to making available essential fuels, particularly cooking fuels to the common man at affordable prices.
“The retail selling price of diesel, PDS kerosene and domestic LPG are being modulated to insulate the common man from the impact of rise in international oil prices and domestic inflationary condition,” he said.
The under—recoveries incurred as a result are being subsidised by the government, with the support of upstream oil & gas companies.