The finance ministry on Thursday agreed to give Rs 8,000 crore as subsidy to oil marketing companies towards under-recoveries on sale of diesel, kerosene and LPG for the April-June quarter.
IOC will get R4,261.29 crore, BPCL R1,916.57 crore and HPCL R1,822.14 crore. This will, however, make up for less than a third of losses they incur on selling these fuels below cost.
The amount sanctioned by the finance ministry is short of the R11,451 crore that the oil industry has sought for the first quarter of the fiscal. OMCs lost R25,579 crore on selling diesel, domestic LPG and kerosene below cost in the April-June quarter.
Upstream oil firms will bear R15,303.84 crore and the remaining R2,275.16 crore would be borne by fuel retailers. Upstream company ONGC will contribute R12,621.78 crore, OIL R1,982.06 crore and GAIL R700 crore to make up for the bulk of fuel losses.
The depreciating rupee has resulted in widening losses on fuel sales and oil firms are currently losing R9.29 per litre on diesel, R33.54 a litre on kerosene and R412 per 14.2-kg LPG cylinder.
