GAIL to share subsidy burden pending decision by ministry

Government-owned gas supplier GAIL (India) Ltd will compensate a part of the losses made by state-run oil marketers on account of selling products below production cost in the current fiscal, according to sources. The ministry is, yet to take a final view on the issue for the next fiscal. Currently, refiners such as Oil and Natural Gas Corp. Ltd (ONGC) and Oil India Ltd (OIL) underwrite part of the losses through price discounts to marketers such as Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd, and Hindustan Petroleum Corp. Ltd. The government also makes good a part of the losses by issuing special bonds. 
 
A committee chaired by former Planning Commission member Kirit Parikh, which on 3 February suggested removing price controls on petrol and diesel, made no mention of GAIL underwriting part of the losses due to subsidized prices. The Parikh committee recommended sharing of production revenue from the oil and gas blocks given to state-owned ONGC and OIL with the petroleum ministry to help meet the subsidy burden. The total subsidy sharing by the upstream companies was Rs32,000 crore in 2008-09.