The Finance Ministry has sanctioned an additional INR 15,000 crore to partially compensate state owned oil firms for losses they incur on selling fuel below cost.

A top Oil Ministry official said that "The Ministry of Finance has sanctioned an additional compensation of INR 15,000 crore on November 11 adding this compensation is over and above INR 15,000 crore sanctioned for meeting losses of first quarter ending June 30.

Oil marketing companies have reported an under recovery (revenue loss) of INR 21,374 crore in the July to September quarter. Of this, one third or INR 7,124 crore, would be made good by upstream firms like Oil and Natural Gas Corp and Oil India Ltd.

The Finance Ministry was asked to make good the rest INR 14,250 crore. The official said that "The Finance Ministry has issued the sanction letter and the actual cash would be given the oil companies after the Parliament approves supplementary demands for grants in the winter session of Parliament beginning November 22.”

Indian Oil, Bharat Petroleum and Hindustan Petroleum had lost INR 43,526 crore in April-June quarter on selling diesel, domestic LPG and kerosene at government controlled rates which are way below cost.

The Oil ministry had asked for INR 29,000 crore cash subsidy for Q1 but got only INR 15,000 crore. In the April to September period, the three firms lost INR 64,900 crore on selling the three fuels below cost.

The three firms are currently losing INR 11.44 per litre on diesel, INR 26.94 per liter on kerosene sold through the public distribution system and INR 260.50 per 14.2-kg LPG cylinder supplied to domestic households for cooking purposes.

The official added that "The oil marketing companies are currently incurring a daily under recovery (revenue loss) of about INR 360 crore on sales of diesel, PDS kerosene and domestic LPG.”

(Sourced from ZEE BIZ)