Oil and Natural Gas Corp (ONGC) is likely to pay about Rs 17,000 crore (Rs 170 billion) this financial year to subsidise petrol, diesel, domestic cooking gas (LPG) and kerosene.
"During first half of 2007-08 fiscal, we paid Rs 7,448 crore (Rs 74.48 billion) subsidy... for the full year we expect the payout to cross Rs 17,000 crore," said R S Sharma, chairman and managing director, ONGC. Under the subsidy sharing mechanism, upstream companies like ONGC, Oil India and GAIL bear roughly one-third of the under-realisation on sale of petrol, diesel, domestic LPG and PDS kerosene. 42.7% of the under-realisation is borne by the government by way of issue of oil bonds and oil retailers absorb the rest.
Sharma also clarified that ONGC's realisation on crude oil sale during December was 87-88 dollars per barrel. Indian Oil, Bharat Petroleum and Hindustan Petroleum are projected to lose Rs 69,753 crore (Rs 697.53 billion) on sale of petrol, diesel, domestic LPG and PDS kerosene as Government has not allowed them to raise prices in line with the price of imported crude. Petrol is being sold at a loss of Rs 8.74 a litre, diesel at Rs 9.92 per litre, kerosene Rs 20.53 a litre and LPG at a loss of Rs 256.35 per cylinder.
The current price of Indian basket of crude oil is higher by around 22-23 dollars a barrel, over the international price prevailing at the time of last increase in petrol and diesel prices on June 6, 2006, officials said.