Oil and gas producers ONGC and Oil India Ltd bear a portion of the losses that fuel retailers incur on selling some fuels at subsidized rates. The government also offers the oil refiners a cash subsidy as compensation. (Agencies)
The Oil Ministry this week asked ONGC and OIL to give Rs 15,937.59 crore to make up for 40 percent of Rs 39,725 crore revenue that retailers lost on selling diesel, domestic
LPG and kerosene at government-controlled rates in the October-December quarter, official sources said.
It expects the Finance Ministry to compensate for the remainder by way of a cash subsidy.
ONGC's share of the burden will be Rs 13,764.11 crore, while OIL will bear Rs 2,173.48 crore. Gas utility GAIL India will not pay any subsidy in Q3. ONGC's liability is near the record Rs 13,796.04 crore that the firm had to shell out in Q2.
Sources said the share of Indian Oil Corp (IOC) in the support provided by the two exploration companies would be Rs 8,261.30 crore. Bharat Petroleum Corp (BPCL) would get Rs 3,971.31 crore and Hindustan Petroleum Corp (HPCL) the remaining Rs 3,704.98 crore.
During April-September, retailers IOC, BPCL and HPCL together lost Rs 60,907 crore in revenue on selling diesel and cooking fuel. Of this, ONGC made good Rs 26,417.82 crore, OIL Rs 4,215.76 crore and GAIL Rs 1,400 crore. The government provided Rs 17,772 crore. The unmet revenue loss in HI was Rs 11,101.42 crore.
Sources said ONGC's subsidy burden in Q3 would be 10 percent higher than the Rs 12,433 crore paid in the same period of the previous financial year.
The company says its subsidy outgo of about Rs 26,418 crore in April-September had dented net profit by Rs 14,752 crore and a higher subsidy in the December quarter would further dent its profitability. ONGC had reported a net profit of Rs 10,080 crore in H1.
Oil and gas producers ONGC and Oil India Ltd bear a portion of the losses that fuel retailers incur on selling some fuels at subsidized rates. The government also offers the oil refiners a cash subsidy as compensation.