The India government's subsidy burden on petroleum products increased by Rs.17,000 crore and that of upstream companies (the exploration and production segment, as opposed to the downstream or refining and marketing segment) by Rs.5,000 crore last year, both witnessing an increase of 20 percent. However, the government expects the overall fuel subsidy burden halved to Rs.80,000 crore in 2013-14, compared to Rs.161,029 crore in 2012-13, reports said.
It had budgeted Rs.65,000 crore for the oil subsidy this year, of which Rs.45,000 crore already gone towards meeting last year's spillover requirement, leaving a balance of Rs.20,000 crore. To bridge the gap, the Finance Minister P. Chidambaram said Rs.60,000 crore would come from upstream companies, adding that the subsidy bill for this year would not exceed Rs.80,000 crore.
This means through measures such as diesel price decontrol, the cap on subsidized cooking gas (LPG) and export parity pricing, the finance ministry expects its share of oil subsidy to come down drastically, by at least 80 percent.
The subsidy burden on the upstream companies, such as Oil and Natural Gas Corporation, GAIL India and Oil India, came down to 37 percent from 40 percent the previous year, from Rs.55,000 crore in 2012-13 from Rs.60,000 crore the year before.
Following a battle over export parity pricing (EPP), the finance ministry had agreed on Thursday to pay Rs.45,000 crore as subsidy for the second half of 2012-13, in a meeting with petroleum minister M. Veerappa Moily in the presence of Prime Minister Manmohan Singh. The finance ministry already paid Rs.55,000 crore for the first half of the financial year as the government share.
The three state-run oil marketing companies -- Indian Oil, Hindustan Petroleum and Bharat Petroleum -- have reported Rs.161,029 crore as gross under-recoveries in 2012-13 (from retailing petro products at the government controlled price). This is significantly more than the Rs.1,38,541 crore in 2011-12.
In 2010-11, the figure was Rs.78,190 crore, with the share of the government at Rs.41,000 crore (52 percent) and upstream companies at Rs.30,297 (39 percent).
Since May 16, the three OMCs have been incurring daily under-recovery of Rs.252 crore on the sale of diesel, kerosene and LPG. This was Rs.256 crore a day for the previous fortnight.
The under-recovery on diesel is now Rs.3.73 a litre, kerosene is Rs.27.93 a litre and domestic LPG is Rs.378.38 a cylinder.
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