The government will pay R8,772-crore cash subsidy to state-owned oil marketing companies to compensate them for selling diesel and cooking fuel at discounted prices in the September quarter.
Indian Oil (IOC), Hindustan Petroleum (HPCL) and Bharat Petroleum (BPCL) lost R35,328 crore in revenues on selling diesel, LPG and kerosene at government-controlled rates.
The share of upstream companies’ burden, including that of ONGC, Oil India and GAIL, stood at R16,729.74 crore. The finance ministry had provided R8,000 crore subsidy of the R25,579 crore lost on diesel and cooking fuel sales in April-June. After accounting for upstream contributions of R15,303.84 crore in Q1 and R16,729.74 crore for Q2 and government subsidy of R16,772 crore, fuel retailers are left with R12,100 crore of unmet losses this year.
Retailers like IOC sell diesel and cooking fuel at below cost. The losses they incur are met by government cash subsidy as well as through support from upstream firms. Of R16,729.74 crore that upstream firms have been asked to pay for Q2, ONGC’s share will be R13,796.04 crore while OIL will bear R2,233.70 crore and gas utility GAIL will pay R700 crore.