In continuation with the reform measures amid global financial slowdown, the central government has taken new measure on fuel subsidy sharing, and urged the upstream PSUs like ONGC, OIL and GAIL to contribute the diesel and cooking fuels at fixed rate of $56 per barrel. The mechanism of subsidy burden sharing by the state owned oil companies was introduced, as the petroleum retailing companies like IOC, BPCL and HPCL were waiting for compensation for the subsidy they provide for diesel, cooking gas (LPG) and kerosene.
Earlier the subsidy burden on ONGC, OIL and GAIL used to be 33% of the subsidy, while previous year it had peaked to 39%. Last fiscal, upstream PSUs compensated about Rs 55,000 crore to IOC, BPCL and HPCL out of the overall loss of about Rs 138,541 crore. Whereas in 2010-11 and 2009-10 upstream PSUs paid Rs 30,297 crore and Rs 14,430 crore respectively to PSU oil retailers. The Petroleum Minister had pointed out that after the appreciation of Indian Rupee against US Dollar the under recover of the oil retailers will come down marginally to Rs 167,415 crore, but still it will be substantially higher for the fiscal.
The Petroleum ministry had sought cash subsidy of Rs 89,750 crore for first half of this fiscal, though the ministry of finance is yet to compensate oil firms for the subsidy they have provided, even though the upstream firms have compensated Rs 15,061 crore out of the Rs 47,811 crore losses of the oil retailers in the first quarter. The Petroleum Secretary, G C Chaturvedi expressed hopes that the upstream contribution would be in the range of Rs 14,000-15,000 crore for the second quarter.
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