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Oil subsidy plea on the boil

New Delhi, Aug. 6: The oil ministry wants around Rs 13,140 crore as subsidy for state-owned refiners for selling diesel, domestic cooking gas and kerosene at government controlled prices during the first quarter of the current financial year.

State-owned oil marketing companies are keen the finance ministry clears the subsidy bill at the earliest as their first-quarter results are due any time.

During April-June, the three retailers lost Rs 28,690.74 crore on diesel, kerosene and cooking gas.

Upstream PSU companies ONGC, Oil India and GAIL have been asked to meet Rs 15,546.65 crore, or 54 per cent of the under-recovery or revenue loss.

ONGC has been asked to chip in with Rs 13,200.10 crore, official sources said. This is 4.5 per cent higher than the Rs 12,622 crore it had paid in the first quarter of the previous fiscal.

OIL has been asked to provide Rs 1,846.55 crore, while the share of gas utility GAIL has been fixed at Rs 500 crore. The government is yet to announce its cash subsidy for the first quarter. Sources said of the upstream subsidy, IOC will get Rs 8,107.21 crore, BPCL Rs 3,830.56 crore and HPCL Rs 3,608.88 crore.

Of the Rs 28,690.74 crore revenue loss in April-June, fuel retailers lost Rs 12,129 crore on domestic LPG, Rs 9,037 crore on diesel and Rs 7,524 crore on kerosene sold through the public distribution system.

According to some reports, given the efforts to move towards market-linked diesel prices and an expected decline in crude prices, under-recoveries on petroleum products are expected to drop to half of those in 2013-14 through this financial year.

Thus, the decline in under-recoveries will have a significant positive impact on both upstream and downstream PSU oil companies.

The under-recoveries for the financial year 2014-15 are projected to be Rs 91,665 crore, while the figure was Rs 1,39,869 crore in 2013-14.

Meanwhile, oil minister Dharmendra Pradhan said UAE’s national oil company Adnoc and Kuwait Petroleum Corp (KPC) have evinced interest in hiring a part of India’s under-construction strategic storage in Visakhapatnam, Mangalore and Padur (Karnataka).

“The national oil companies of the UAE and Kuwait, namely Abu Dhabi National Oil Company (Adnoc) and KPC, have expressed interest (to store about 2 million tonnes of crude in the caverns),” he said in a written reply to the Rajya Sabha here.

India, which is 79 per cent dependent on imports to meet its crude oil needs, is building underground storages at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka to store about 5.33 million tonnes of crude oil to guard against crude price shocks and supply disruptions.

The storages at Visakhapatnam, Mangalore and Padur will be enough to meet the nation’s oil requirement of about 10 days. Official sources said the 1.33mt storage at Visakhapatnam would be ready by October while the 1.5mt Mangalore facility and 2.5mt unit at Padur are expected by mid-2015.

 
 
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