New Delhi, Jan 31 (PTI) The government today approved Rs8,000 crore in cash subsidy to state-owned fuel retailers tomake up for half of the revenues they lost on selling diesel,domestic LPG and kerosene below cost in the third quarter.
"Finance Ministry has issued a letter approving Rs 8,000crore in cash compensation for the October-December quarter,"an oil ministry official said.
Indian Oil Corporation (IOC), the nation''s largest fuelretailer, will get Rs 4,442.45 crore, Bharat Petroleum Corp(BPCL) Rs 1,809.85 crore and Hindustan Petroleum Corporation(HPCL) Rs 1,747.70 crore.
The three companies had last week postponed announcingtheir third quarter financial results in anticipation of thegovernment subsidy announcement, without which they would haveposted losses.
The official said IOC, BPCL and HPCL lost a shade lessthan Rs 16,000 crore revenue on selling diesel, domestic LPGand kerosene below their imported cost.
Of this, upstream firms Oil and Natural Gas Corp (ONGC),Oil India Ltd (OIL) and GAIL India Ltd made up Rs 5,198 croreby way of discounts on crude oil and petroleum products theysell to the three retailers. ONGC chipped in Rs 4,222 crore,OIL Rs 558 crore and GAIL Rs 418 crore.
The subsidy approved today is less than Rs 10,000 crorecompensation that the oil ministry was seeking.
"For the first six months, the finance ministry hadpreviously approved Rs 13,000 crore and now with today''s Rs8,000 crore, the total subsidy from the government so far thisfiscal is Rs 21,000 crore," the official said.
IOC, which was suppose to announce third quarter resultson January 25, has now scheduled board meeting on February 10.
Similarly, BPCL has postponed the January 31 board meeting forthe third quarter results to February 9 while HPCL put off itsJanuary 27 meet to February 11.
While, petrol price was freed from the government controlin June, state oil firms continue to sell diesel, domestic LPGand kerosene at government ruled prices which is substantiallylower than cost of production.
IOC, BPCL and HPCL currently lose Rs 6.80 per litre ondiesel, Rs 18.66 per litre on kerosene and Rs 366 per 14.2-kgLPG cylinder.