The petroleum ministry on Thursday said the government is committed to adequately compensating state-owned oil marketing companies for the losses they incur on selling diesel and cooking fuel below cost.
?The under-recoveries of oil marketing companies (OMCs) would be adequately and fully addressed by the burden-sharing mechanism, wherein the revenue loss is partly made up by upstream firms, partly by the government and if possible, a small portion is borne by the OMCs themselves,? Sundareshan said here.
Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) now lose over Rs 225 crore a day on selling diesel, domestic LPG and kerosene below their imported cost, with global crude oil prices at a two-year high of $92 a barrel.
Sundareshan said it is totally incorrect to assume that the under-recoveries (or revenue loss) of fuel retailers would be left unattended. Sundareshan, however, refused to comment on why a ministerial panel led by finance minister Pranab Mukherjee could not meet to decide on a possible increase in the price of diesel and LPG.
Oil firms currently sell diesel at a loss of Rs 6 a litre and domestic LPG at Rs 272 a cylinder.
Sundareshan said petroleum minister Murli Deora and Mukherjee had a meeting in Haldia on December 25 on the issue of reducing the losses of fuel retailers. He added that the finance ministry will not restrict itself to compensating the oil companies for one-third of their revenue loss on the basis of the Rs 68,361-crore estimate made earlier by the government. Rather, it would reimburse the oil marketing companies on the basis of their actual under-recoveries.
Upstream firms Oil and Natural Gas Corporation (ONGC), Oil India and GAIL India will shoulder 33% of the oil marketing companies? subsidy burden, while the oil ministry is pitching for half of the revenue loss to be provisioned for in the union budget.
The finance ministry had previously stated that it would make up for only one-third of the revenue loss, but Sundareshan said on Thursday that there was ?no insistence by the ministry of finance that they will not give more than one-third.? The final compensation figure would be worked out based on the actual revenue loss at the end of the fiscal, he said.
