Oil Min seeks Rs 40,000 cr cash subsidy for FY'12

The Petroleum Ministry has sought an additional Rs 40,000 crore in cash subsidies for the current fiscal to compensate fuel retailers for losses incurred on diesel and cooking fuels, even as Oil Minister S Jaipal Reddy gave no indication of a fuel price revision soon.

Oil Secretary G C Chaturvedi said state-owned fuel retailers are projected to lose close to Rs 137,524 crore on selling diesel, domestic LPG and kerosene in the current fiscal.
“The finance ministry has provided Rs 45,000 crore as cash compensation (out of Rs 97,313 crore oil firms lost in first three quarters). Upstream oil firms have provided another Rs 37,000 crore,” he said.

For the full year, share of upstream firms like ONGC is likely to be about Rs 53,000 crore and “we want the balance Rs 40,000 crore (Rs 137,524 crore minus Rs 45,000 crore already received in cash subsidy and Rs 53,000 crore from upstream companies) to be provided by the finance ministry,” he said.

The ministry has separately asked for an additional Rs 5,000 crore in cash subsidies. Oil firms need to raise petrol price by Rs 7.72 a litre, including taxes, as rates haven’t been revised since December due to assembly polls in states like Uttar Pradesh. Petroleum Minister S Jaipal Reddy deflected questions on when price of petrol and also those of diesel and LPG would be revised next.

The government had freed petrol pricing from its control in June 2010 but oil firms haven’t revised rates since December 1.

The international price of gasoline (against which domestic petrol prices are benchmarked) have risen from $109 a barrel at the time of last revision in December 2011 to USD 134 per barrel at present.

State-owned oil companies like IOC use fortnightly average of benchmark oil price and exchange rate to revise retail rates on 1st and 16th of every month.

“The rise in international oil prices is a matter of concern. But before taking a decision, we have to consider political factors,” Reddy said on revision in diesel and LPG rates.

The government continues to control rates of diesel, domestic LPG and kerosene which were sold way below cost to keep inflation under check. The oil firms lose Rs 14.73 per litre on diesel, Rs 30.10 a litre on kerosene and Rs 439.50 per 14.2-kg LPG cylinder.

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