Finmin gives Rs 21,000 cr subsidy support to Oilcos

NEW DELHI: Finance ministry has given Rs 21,000 crore to oil marketing companies for losses incurred because of selling certain petroleum products at below market prices.

The total compensation to the oil companies for the current year has reached Rs 43,000 crore.

This is more than the Rs 38,386 crore set aside for petroleum subsidy in the current year. The government had deregulated petrol prices in June last year but price of diesel, kerosene and cooking gas is still decided by the government.

The price of Indian basket of crude has risen from a low of $68.06 to a barrel to over $100 a barrel.

This has imposed serious losses on oil companies as the last revision in prices of controlled products was in June 2010.

The state run oil marketing companies are incurring under recovery of Rs 9.55 per litre on diesel, Rs 20.57 a litre on kerosene supplied through public distribution system and Rs 356.07 per cylinder on domestic cooking gas.

The higher subsidy payout will increase government expenditure in the current year. In the third supplementary the government had proposed about 12,000 crore of extra expenditure, which will increase further because of the latest subsidy payouts. The government hopes to meet this extra expenditure from savings elsewhere.