ONGC subsidy outgo to rise about 17.5%

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Friday , May 16, 2008 at 1424 hrs Oil and Natural Gas Corp is likely to see a 17.5 per cent rise in its outgo towards subsidising auto and cooking fuel to over Rs 20,000 crore in 2007-08.

"We may pay over Rs 20,000 crore subsidy in 2007-08 as compared to Rs 17,024 crore subsidy outgo in the previous year," ONGC Chairman and Managing Director R S Sharma said in New Delhi.

The nation's largest oil and gas producer has to bear about 28.5 per cent of the total under-realisation incurred by state-run retailers Indian Oil, Bharat Petroleum and Hindustan Petroleum on sale of petrol, diesel, domestic LPG and PDS kerosene. It pays the subsidy by way of discounts on crude to these companies.

The government has not allowed the retailers to raise fuel prices despite doubling of crude oil cost. The retailers lost over Rs 70,500 crore on fuel sales in 2007-08 and are expected to lose about Rs 1,80,000 crore this fiscal. The Centre bears 42.7 per cent of this loss by way of bonds.

Sharma, however, voiced concern at the adhoc manner in which the subsidy payments are fixed and demanded a transparent sharing mechanism.

ONGC paid over Rs 13,000 crore towards subsidising fuel in first nine months of 2007-08 fiscal and may end up paying another Rs 7,000 crore for the fourth quarter, he said.

The spurt in international oil prices have seen the company's gross realisation on crude oil sales rise to 120 dollars a barrel, twice the realisation it made a year ago, he said.