The finance ministry on Wednesday released a little over half of the subsidy due to the three state-run oil marketing companies (OMCs) pushing them into the red for the second consecutive quarter this fiscal.
Ministry sources said that the Department of Expenditure approved Rs 30,000 crore as compensation towards losses incurred by the OMCs for retailing diesel, LPG and kerosene below cost price to the consumers in line with the orders of the majority shareholder, the Union government.
The petroleum ministry had claimed Rs 55,000 crore as refund for the first half of fiscal 2012-13.
The fund release would result in Indian Oil Corp reporting a loss of Rs 12,000 crore and Bharat Petroleum and Hindustan Petroleum posting losses of Rs 500 crore each for the first half when they announce their results on November 9. The three had reported losses in the first quarter.
This is the first payment towards the under-recoveries of the OMCs for this fiscal as the finance ministry paid Rs 43,580 crore, earmarked in the Budget 2012-13, to set off their dues for the last fiscal year.
Sources said that the fiscal position was so tight that the approved money would be released in four equal instalments every fortnight. The final compensation figure for the full fiscal would be determined after the Department of Expenditure verifies the claims of the losses by the OMCs.
However, the subsidy clearance would come as a breather for the OMCs as there was no word from the ministry whether it would pay before November 9. Any further delay could have resulted in a downgrade of their ratings.
State retailers currently lose Rs 9.82 per litre on diesel, Rs 33.93 a litre on kerosene and Rs 468.50 per 14.2-kg subsidised LPG cylinder.
Petroleum Minister Veerappa Moily had said that his ministry would seek over Rs 1,00,000 crore this fiscal towards fuel subsidy even after discounts from state-run upstream oil and gas companies.