The Government on Thursday sanctioned Rs17,772 crore cash subsidy to fuel retailers like IOC to cover for half of the revenues they lost on selling diesel and cooking fuels below cost in the September quarter.
The Finance Ministry had yesterday sent a letter approving Rs8,772 crore subsidy for Indian Oil Corp (IOC), Hindustan Petroleum Corp (HPCl) and Bharat Petroleum Corp (BPCl). Today, it sanctioned an additional Rs9,000 crore, official sources said.
The three retailers had lost Rs35,328 crore in revenues on selling diesel, cooking gas (lPG) and kerosene at government controlled rates in July-September quarter.
less than half of this, Rs16,729.74 crore, is being made up by upstream oil and gas producers like ONGC and GAIl and now Rs17,772 crore is coming by way of cash subsidy.
Sources said Finance Ministry had provided Rs8,000 crore subsidy to cover for 31 per cent of the Rs25,579 crore lost on diesel and cooking fuel sales in April-June.
After accounting for upstream contributions of Rs15,303.84 crore in Q1 and Rs16,729.74 crore for Q2 and subsidy of Rs25,772 crore, fuel retailers are left with Rs3101.42 crore of unmet losses.
In April-September period, the three retailers lost Rs60,907 crore in revenues on diesel, lPG and kerosene sales.
With the additional dole, retailers will be able to book nominal profits for the second quarter. IOC is scheduled to announce its September quarter earnings tomorrow while HPCl and BPCl would do that next week.
Of the Rs 17,772 crore sanctioned, IOC would get just over Rs9,172 crore while BPCl would get Rs4,443 crore. HPCl would get the remaining Rs4,151.5 crore. Retailers like IOC sell diesel and cooking fuel at rates which are way below cost. The losses they incur are met by government cash subsidy as well as through support from upstream firms.
Of the Rs16,729.74 crore that upstream firms have been asked to pay for Q2, ONGC’s share will be Rs13,796.04 crore while OIl will bear Rs2,233.70 crore. Gas utility GAIl will pay Rs700 crore, sources said.
The subsidy ONGC has been asked to pay is 11.9 per cent more than Rs12,330 crore fuel subsidy outgo in July-September quarter of 2012. It is also 9.3 per cent more than Rs12,622 crore payout in Q1 of current fiscal.
Fuel retailers had in Q1 of current fiscal lost Rs25,579 crore on sale of diesel and cooking fuel. Of this Rs15,303.84 crore came from upstream firms (ONGC Rs12,621.78 crore, OIl Rs1,982.06 crore and GAIl Rs700 crore).