Losses absorbed by fuel retailers may quadruple to Rs 3,700 cr
Losses will incur, as the finance ministry is unwilling to provide additional subsidy
New Delhi: Losses to be borne by Indian Oil Corporation (IOC) and other retailers of diesel, kerosene and cooking gas may quadruple to Rs 3,700 crore in this financial year as the finance ministry is unwilling to provide additional subsidy.
IOC, Hindustan Petroleum Corp and Bharat Petroleum Crop together are projected to lose about Rs 1,41,000 crore in revenue this financial year on selling diesel, LPG and kerosene at rates set by the government. Of this shortfall, the finance ministry is willing to provide no more than Rs 72,800 crore, sources privy to the matter said.
Another Rs 64,500 crore will come from upstream firms such as Oil and Natural Gas Corp, leaving Rs 3,700 crore to be absorbed by the three state-owned fuel retailers. The loss they will bear is four times more than the Rs 900 crore hit taken by IOC, BPCL and HPCL in 2012-13.
Sources said the finance ministry had given the fuel retailers Rs 27,772 crore in cash as subsidy for selling diesel, cooking gas and kerosene below cost in the first nine months of 2013-14. It will provide another Rs 10,000 crore this financial year and will roll over Rs 35,000 crore to 2014-15.
ONGC and other upstream firms, which provided about Rs 47,972 crore as subsidy support during April-December, will give a little less than Rs 16,530 crore in the fourth quarter. Finance Minister P Chidambaram provided Rs 65,000 crore towards fuel subsidy in his interim budget for 2014-15. This includes Rs 35,000 crore carried over from the current fiscal, leaving only Rs 30,000 crore for 2014-15. Sources said the oil marketing companies currently lose Rs 399 crore daily on selling diesel, kerosene and domestic LPG at government-controlled rates. They lose Rs 7.16 a litre on diesel, Rs 36.34 per litre on kerosene sold through the public distribution system and Rs 605.80 per 14.2-kg LPG cylinder.
While the government freed petrol prices in June 2010, it started increasing diesel rates by 50 paise a litre every month in January last year with a view to cut subsidies. Since January 2013, diesel prices have risen by Rs 8.33. The three firms together lost Rs 1,00,632 crore on fuel sales in April-December and may end the financial year with a total under-recovery of about Rs 1,41,000 crore. This compares with an under-recovery of Rs 1,61,029 crore in 2012-13 and Rs 1,38,541 crore in the previous fiscal.