New Delhi: Putting petrol price hike on the backburner, due to political reasons, might prove costly for the Union Ministry of Finance. In a clear indication to state–owned oil firms to disburse subsidy by the end of current financial year, the Petroleum Ministry has made it clear that if companies fail to do so then by April 2012 the oil supply in the country will be disrupted.

Sources say, extreme pressure will be mounted on oil companies if petrol prices are not revised. In such a situation by April 2012, the companies would even fail to avail loan facilities from banks.

Taking serious note of the situation the Petroleum Ministry has given ultimatum to oil firms and asked them to pay the subsidy given by the government by the end of 2012.

As per the estimates made by the Petroleum Ministry, during the current fiscal year, state-owned oil companies are expected to incur under-recovery of a whooping amount of Rs 1,40,000 crores.

After 2006-07, the government has been giving 50 percent of the under-recovery as subsidy to oil companies. On the basis of this, the Petroleum Ministry has been demanding Rs 70,000 crores from the Centre.

However, in 2011-12 budget, the ruling dispensation kept provision of Rs 20,000 crores for the Petroleum Ministry. Up till now, the government has disbursed Rs 30,000 crores to oil companies. It has yet to pay Rs 40,000 crores.

Surprisingly, the Ministry believes that although if the centre allocates Rs 70,000 crores, chances of oil firms gaining profit are minimal. From last few years, besides the government subsidy, 60 percent of the under-recovery is incurred by companies involved in production of crude oil (upstream) and 40 percent by marketing companies (downstream).

Ironically, this year, ONGC and Oil India Limited are not in a condition to pay Rs 42,000 crores to the government.