New Delhi, Feb. 19: State-owned Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) are likely to share a higher subsidy burden this fiscal to help refiners such as Indian Oil Corporation (IOC) sell diesel and cooking gas at government-controlled rates.
In the interim budget, finance minister P. Chidambaram had revised the oil subsidy provision estimate by Rs 20,480 crore to Rs 85,480 crore for this fiscal and provided a sum of Rs 63,427 crore for 2014-15, including a rollover amount of Rs 35,000 crore.
In the first three quarters, the oil marketing companies have reported net under-recoveries of Rs 1,00,600 crore. After accounting for Rs 35,800 crore of reimbursements promised by the government and Rs 48,000 crore by the upstream companies, oil marketing companies still have net under-recoveries of Rs 16,800 crore.
India Rating and Research in a note said, “The aggregate subsidy liability for 2013-14 would be higher by Rs 45,000 crore at around Rs 185,000 crore, considering the rollover subsidy from 2012-13.”
“Thus, the subsidy burden on upstream companies and marketing companies would be Rs 64,500 crore in this fiscal, after accounting for Rs 85,500 crore budgetary support and Rs 35,000 crore rollover to 2014-15. This would mean that either the upstream companies would bear a higher burden than in the last two years or the marketing companies would be obliged to bear a part of the subsidy,” it added.