Economy

Govt releases Rs 7,000-cr compensation for oil retailers

Our Bureau New Delhi | Updated on March 06, 2012

The Government has released Rs 7,000 crore to the three public sector oil marketing companies as compensation towards selling diesel, PDS kerosene and domestic LPG below cost.

According to a Government source, with the latest instalment, the total payment to the three oil marketing companies — Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation — has touched Rs 30,000 crore for 2011-12. These companies were earlier given three instalments of Rs 8,000 crore (twice) and Rs 7,000 crore.

Despite a surge in international prices of crude, the oil marketing companies are bound to sell diesel, kerosene and LPG at lower than cost because of the Government's policy.

Part of the gap between retail price and the cost is borne by the Government and some by the upstream companies such as ONGC, Oil India and GAIL. This is in addition to a subsidy of Rs 0.82 a litre on PDS kerosene and Rs 22.58 a cylinder on domestic LPG, provided by the Government.

Meanwhile, according to a statement issued by the Petroleum Ministry, under recovery on a cylinder of domestic LPG has gone up from Rs 379 (for a period between February 16 and 29) to Rs 439 for the fortnight beginning March 1. On the other hand, loss on diesel has come down from Rs 12.31 a litre to Rs 12.04 and on kerosene, it has come down from Rs 28.77 to Rs 28.54.

With this, the daily loss is likely to touch Rs 500 crore for all the three companies. The annual under recovery is estimated at Rs 1,37,041 crore.

shishir.s@thehindu.co.in

Published on March 06, 2012

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