The government has asked oil producers to provide Rs 10,896 crore in subsidies to offset some of the losses incurred by state retailers that have been selling fuel at government-set low rates. In addition, the federal finance ministry has agreed to support the retailers with a Rs 5085 crore subsidy for the December quarter.
Since the government regulates retail prices of liquefied petroleum gas and kerosene, State-run producers Oil and Natural Gas Corp , Oil India and GAIL (India) sell crude and related products at a discount to the retailers get cash subsidies from the government for selling fuel at below market rates. The three fuel retailers i.e. Indian Oil Corporation (IOC), Bharat Petroleum Corp and Hindustan Petroleum Corp, had suffered revenue losses of Rs 15981 crore during the quarter.
According to reports, while IOC, the country’s biggest refiner and fuel retailer will get a subsidy of Rs 8982 crore, HPCL and BPCL will get subsidy 3586 crore and Rs 3413 crore respectively. On the flip side, ONGC will pay a subsidy of Rs 9458 crore while Oil India`s share is pegged at Rs 1438 crore.