The India government asked the upstream oil companies, such as Oil and Natural Gas Corporation Ltd, or ONGC, to give around Rs.36,900 crore towards fuel subsidy during April to December 2011, reports said, quoting an official.
Fuel retailers Indian Oil Corporation Ltd. (IOC), Hindustan Petroleum Corporation Ltd. (HPCL) and Bharat Petroleum Corporation Ltd. (BPCL) incurred a revenue loss of Rs.97,300 crore on selling diesel, LPG and kerosene at government controlled rates during the first nine months of this fiscal.
"Of this, the upstream companies have been asked to make good around 38 percent or Rs.36,894 crore," the official said. .
The government regulates the rates of diesel, domestic LPG and kerosene to keep inflation under check. The revenue loss incurred by retailers on selling fuel below cost is split between the government and the oil companies.
The government has so far granted Rs.30,000 crore in cash subsidy to make up for more than half of the revenues that IOC, BPCL and HPCL lost on fuel sales during first half. Upstream firms made good one-third of the revenue loss.
While the government has not yet provided subsidy for the third quarter, upstream firms are to consider their third quarter results this week.
In the first six months, ONGC, Oil India and GAIL (India) had paid fuel subsidy at the rate of around 33 percent of the revenue loss on fuel sales. And so, they will pay extra in the third quarter to average the payout at 38 percent for the April-December period.
The official said ONGC will pay Rs.30,296 crore for the nine-month period, up by 42 percent over Rs.21,291 crore pay-out in the same period a year ago. In the first six months, it had shelled out Rs.17,760 crore and so it will provide an additional Rs.12,536 crore in the third quarter, when it considers Q3 earnings this week.
OIL will pay Rs.4,478 crore towards fuel subsidy for the April-December period , compared to Rs.1,596.68 crore pay-out in the corresponding period last year. It had in the first half paid Rs.2,625.09 crore towards fuel subsidy and would give a further Rs.1,852.91 crore in the third quarter when it considers the financial results on Saturday.
GAIL's share has been fixed at Rs.2,120 crore for the first nine months of current fiscal, the official said.
While the government had in June 2010 freed the pricing of petrol from its control, it continues to regulate the retail rates of diesel, domestic LPG and kerosene.
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