The government on Wednesday agreed to give an additional Rs 14,000 crore (Rs 140 billion) to oil retailers Indian Oil, Bharat Petroleum and HPCL to make up for most of the losses they incurred on selling cooking fuel below cost.
The three retailers lost Rs 31,621 crore (Rs 316. 21 billion) on selling domestic LPG and kerosene below cost in 2009-10 fiscal.
Of this, the finance ministry had previously released Rs 12,000 crore (Rs 120 billion) in cash and today they agreed to give an additional Rs 14,000 crore.
"We had sought Rs 19,620 crore (Rs 196.20 billion) in compensation but they (finance ministry) has agreed to give Rs 14,000 crore," Oil Minister Murli Deora said.
Oil Secretary S Sundareshan met Expenditure Secretary Sushma Nath today seeking Rs 19,620.95 crore to fully compensate oil marketing companies' revenue loss on PDS kerosene and domestic LPG in 2009-10.
The three firms lost Rs 46,051 crore (Rs 460.51 billion) on selling petrol, diesel, domestic LPG and PDS kerosene below imported cost in 2009-10.
He told Nath that upstream firms Oil and Natural Gas Corp (ONGC) and Oil India Ltd are meeting the entire Rs 14,430 crore (Rs 144.30 billion) loss on petrol and diesel. Sources said upstream firms, which are meeting 32 per cent of the total revenue loss, cannot contribute anything beyond this.
The ministry reminded of the finance ministry's commitment to meet the entire deficit on LPG and kerosene. Deora said the finance ministry giving Rs 14,000 crore would help retailers but did not say how the balance Rs 5,621 crore (Rs 56.21 billion) may be met. "Upstream firms have done all they could and we cannot ask them to foot an additional Rs 5,621 crore," a ministry official said.
"Perhaps this may have to be borne largely by the retailers with upstream firms chipping in some." Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum currently lose Rs 272.5 crore (Rs 2.72 billion) per day on selling fuel below cost and may end the current fiscal with a Rs 90,150 crore (Rs 901.50 billion) revenue loss.
They currently sell petrol at a loss of Rs 6.63 a litre while the loss is Rs 6.25 per litre on diesel, Rs 19.74 per litre on PDS kerosene and Rs 254.37 per 14.2-kg LPG cylinder.
An Empowered Group of Minister headed by Finance Minister Pranab Mukherjee is likely to meet next week to look freeing auto fuel prices and ways of meeting the balance revenue loss.
Besides Mukherjee and Deora, the group also comprises Agriculture Minister Sharad Pawar, Railways Minister Mamata Banerjee, Fertiliser Minister M K Alagiri, Road Transport Minister Kamal Nath and Planning Commission Deputy Chairman Montek Singh Ahluwalia.
