The government has earmarked Rs 8,400 crore for compensating three Oil public sector units (PSU) — Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd — to compensate for the loss from subsidies they incurred in the quarter ended March 31.
In the January to March period, the three state-owned fuel retailers paid around Rs 5,740 crore to consumers as subsidy under the direct benefit transfer scheme for LPG — Pratyaksh Hastantrit Labh (PaHaL) — while around Rs 1,900 crore was paid under the Pradhan Mantri Ujjwala Yojana.
Generally, according to prevailing practice, oil companies sell the fuel and LPG on a subsidised rate, for which they are then compensated by the government. “According to official estimates, Rs 8,400 crore has been earmarked to pay the three oil PSUs for the January-March period and final approval will come soon,” an official with finance ministry told this publication.
Of the total bill, Rs 7,640 crore was the amount pegged as compensation for the cash subsidy on domestic liquefied petroleum gas cylinders and Rs 730 crore is for the sale of subsidised kerosene.
In the October to December quarter, the total loss on sale of subsidised fuels stood at Rs 14,280 crore. Of this, Rs 1,810 crore was on account of kerosene under-recovery and whopping Rs 12,470 crore were on account of subsidy for cooking gas cylinders.
For the whole financial year ended March, the total subsidy burden on account of kerosene stood at around Rs 6,000 crore, while for LPG, it was around Rs 37,200 crore, higher than overall subsidy burden of Rs 24,180 crore for the financial year 2017-18. The officials have attributed the rise in subsidy bill to the rise in crude oil rates and the increase in the penetration of the Ujjwala Yojana scheme, which they said, resulted in more LPG cylinders distributed.