NEW DELHI: The sharp fall in global crude oil prices in the last six months came as a breather to the oil upstream companies, as the government decided to exempt them from contributing towards subsidy for under-recoveries of oil marketing companies.
The government is likely to exempt the two public sector oil explorers Oil and Natural Gas Corporation and Oil India Limited from the payment of fuel subsidy for the last quarter ending March 31st.
“The Finance Ministry has given an assurance that the upstream companies will not have to bear any subsidy in the fourth quarter,” the ministry official said adding the government is likely to pay Rs 7,682 crore as cash subsidy for the fourth quarter.
In the first nine months, the government gave cash subsidy of Rs 22,085 crore to meet less than a third of the under-recoveries on cooking fuel and diesel. However, the upstream oil producers ONGC, OIL and GAIL contributed Rs 42,822 crore.
The government regulates the price of domestic cooking gas and kerosene. The under-recoveries on selling fuel below cost are projected at Rs 74,773 crore in 2014-15 fiscal.