Finance Ministry sanctions Rs. 5,223 crore subsidy for IOC, BPCL PTI

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Indian Oil Corp (IOC) will get Rs, 2,932 crore subsidy and Bharat Petroleum Corp Ltd (BPCL) Rs, 2,291 crore for selling fuel below cost in Q4 of 2014-15, but Hindustan Petroleum Corp Ltd (HPCL) will not get any support.

The Finance Ministry has sanctioned Rs. 5,223 crore fuel subsidy for the January-March quarter to cover almost all of the revenue loss that the two retailers suffered on selling domestic cooking gas (LPG) and kerosene at government rates.

Sources said that out of the subsidy sanctioned, IOC will get Rs. 2,932.62 crore and BPCL the remaining Rs. 2,291 crore. HPCL, they said, will not get any subsidy due to certain adjustments for the past payments.

With this, the total subsidy provided by the government in 2014-15 goes up to Rs. 27,308 crore. For the first three quarters, the government had provided Rs. 22,085 crore. The fuel retailers had lost a total of Rs. 72,314 crore on selling diesel (up to October 17), LPG and kerosene at government rates, which were way below cost in 2014-15.

Sources said upstream oil producers ONGC, Oil India and GAIL have been exempted from paying any subsidy in Q4. The government regulates price of cooking fuels LPG and kerosene to shield the poor. The difference between the cost and the retail selling price is borne by the government by way of cash subsidy and upstream producers like ONGC.

Most of the under-recoveries, or revenue retailers’ loss on selling fuel below cost, of Rs. 67,091 crore in the first nine months of the fiscal were accounted for by the subsidy support and dole out from upstream firms like ONGC.

In the first nine months, the government gave cash subsidy of Rs. 22,085 crore to meet less than a third of the under-recoveries on cooking fuel and diesel (up to October 17). Upstream oil producers ONGC, OIL and GAIL chipped in with Rs. 42,822 crore.

Sources said there was an unmet under-recovery of Rs. 2,184 crore for the April-June quarter which the Finance Ministry has so far not agreed to meet.