Directive to ONGC Will Help Retailers Report Healthy Profit
By ENS Economic Bureau | Published: 24th May 2014 06:00 AM |
NEW DELHI: The government has ordered Oil and Natural Gas Corp (ONGC) to pay a record Rs 56,384 crore in subsidy to help state-owned fuel retailers cover part of the losses they incurred on diesel and cooking fuel in 2013-14.
The Oil Ministry, on May 21, asked ONGC and other state oil and gas producers Oil India and GAIL to shell out Rs 67,021.14 crore to cover about 48 per cent of over Rs 1,40,000 crore loss retailers Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) incurred on selling diesel, LPG and kerosene below cost in 2013-14.
The government will chip in Rs 70,772 crore by way of cash subsidy, official sources said.
The government subsidy and upstream support will help fuel retailes report healthy profits for 2013-14 when they report earnings next year. IOC and BPCL are scheduled to report fourth quarter and 2013-14 earnings on May 29, while HPCL will do so on May 28.
The country’s fuel subsidy bill for LPG and diesel stood at a whopping 1.50 lakh crore.
Retailers sell diesel, domestic cooking gas (LPG) and kerosene at rates way below cost. The losses they incur is compensated by way of cash subsidy from government as well as assistance from upstream firms like ONGC.
For 2013-14, ONGC’s subsidy share has been fixed at Rs 56,384.29 crore, 14 per cent higher than Rs 49,421 crore subsidy payout in previous 2012-13 fiscal, they said.
OIL has been asked to pay 11% more subsidy at Rs 8,736.85 crore while GAIL’s subsidy output has been reduced by 30% to Rs 1,900 crore because it no longer gets subsidised feedstock for manufacturing LPG.(With agency inputs)