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OMCs expected to receive cash subsidy of Rs 14-15,000 crore

29 Jul 2011 Evaluate

Government owned Oil Marketing Companies (OMCs) are expected to receive cash subsidy of around Rs 14,000 to 15,000 crore, from finance ministry, for the current financial year. This cash subsidy for the state owned OMCs is from selling diesel, kerosene and domestic cooking gas for below market price.

The Petroleum Ministry had demanded around Rs 29,000 crore cash subsidy for the first three months of current fiscal. However, due to pressure on resources crunch, finance ministry has asked them to settle for less than half of amount. Next month, a provision will be made in the first supplementary demand for funds, which government will put in Parliament. 

The state owned OMCs viz., Indian Oil Corporation (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and the Hindustan Petroleum Corporation (HPCL), are projected to incur loss of roughly Rs 1,10,566 crore for the current financial year. While, government says that the one-third of this estimated loss has to be borne by the OMCs such as ONGC, OIL India and GAIL, this share was increased to 38% in last quarter. However, any announcement has not been done by the government; ONGC has made a provision for bearing one-third of total loss.

At present OMCs incurring loss of Rs 5.63 on every litre of diesel, Rs 24.96 on every litre of kerosene and Rs 291.83 for every cylinder of domestic cooking gas. 

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