"The estimated under-recoveries (on sale of fuel) was Rs 9,274 crore (Rs 92.74 billion) for 2003-04 and Rs 20,146 crore (Rs 201.46 bilion) for 2004-05, which is projected to rise to Rs 38,154 crore (Rs 381.54 billion) during the current year," Petroleum Minister Mani Shankar Aiyar said.
Public sector oil marketing companies - Indian Oil Corporation, Bharat Petroleum Corp and Hindustan Petroleum Corp have modulated the price increase in petrol diesel and maintained the prices of subsidised domestic LPG and PDS kerosene despite the steep rise in international prices. This has resulted in huge revenue loss on sale of all these products.
This burden would be equitably shared by consumers, the government and the oil companies. "Accordingly, from 2003-04 onwards, the government introduced the subsidy sharing mechanism in which, after taking into account the subsidy
provided for the fiscal budget, the balance is shared by the upstream (ONGC and GAIL) and the downstream companies (IOC, BPCL and HPCL) equitably," he said.
While petrol, diesel and LPG prices have been raised twice this year, Oil and Natural Gas Corp's share of the subsidy has almost doubled.
"In order to compensate the public sector oil marketing companies on account of mounting under-recoveries suffered by them over and above the amount allowed as subsidy through the Budget, the government has decided to issue oil bonds. The ministry of finance has made provision to issue bonds of the face value of Rs 5,750 crore (Rs 57.50 billion) during the current financial year," he said.
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