New Delhi, Feb. 12: ONGC will have to pay Rs 8,716 crore as fuel subsidy to PSU refiners in the third quarter of this fiscal as the finance ministry has decided to shell out only Rs 5,085 crore.

The finance ministry has agreed to compensate PSU retailers less than one-third of their Rs 15,981 crore loss from the sale of LPG and kerosene at government-controlled rates in the October-December quarter.

The remaining Rs 10,896 crore will have to be borne by upstream oil producers such as ONGC and Oil India. ONGC may have to shell out close to 80 per cent of this amount.

In the first half of this fiscal, retailers Indian Oil, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd had suffered a loss of Rs 51,110 crore in revenue, most of which was compensated by the upstream players, who paid nearly Rs 32,000 crore, while the government gave Rs 17,000 crore as subsidy.

Sources said the oil ministry had sought Rs 22,101 crore in subsidy to cover for losses in the second half of this fiscal, nearly exempting ONGC and Oil India from any payments. The PSU duo had hardly made any money at the prevailing global oil prices of about $50 per barrel.

Officials said the gross-realisation of ONGC during October-December was $75-76 per barrel, but the actual earning is just $35-36 after the subsidy, which is the form of discounts on crude oil sold to IOC, BPCL and HPCL.

The PSU's cost of production is around $40 per barrel.

Under-recoveries of state-run retailers are projected at Rs 74,773 crore this financial year.