The Oil Ministry on October 31 issued orders asking upstream oil and gas producers like ONGC and Oil India Ltd to give Rs 16,729.74 crore (Rs 167.29 billion) to make up for 47 per cent of the Rs 35,328-crore (Rs 353.28 billion) revenue that retailers lost on selling diesel, domestic LPG and kerosene at government controlled rates in second quarter.
It is expecting the Finance Ministry to make up for the remaining by way of cash subsidy, a top official said. Retailers like Indian Oil Corporation sell diesel and cooking fuel at rates which are way below cost.
The losses they incur are met by government cash subsidy as well as through support from upstream firms. Of the Rs 16,729.74 crore (Rs 167.29-billion) that upstream firms have been asked to pay for Q2, ONGC's share will be Rs 13,796.04 crore (Rs 137.96 billion) while OIL will bear Rs 2,233.70 crore (Rs 22.33 billion).
Gas utility GAIL will pay Rs 700 crore (Rs 7 billion), he said.
The subsidy ONGC has been asked to pay is 11.9 per cent more than Rs 12,330-crore (Rs 123.3-billion) fuel subsidy outgo in July-September quarter of 2012. It is also 9.3 per cent more than Rs 12,622-crore (Rs 126.22-billion) payout in Q1
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