Oil secy govt to pay at least 50 pct fuel subsidy: TV
The federal government will compensate state refiners for at least half of their revenue losses on sale of fuel at discounted rate in the local market, Oil Secretary S. Sundareshan told CNBC-TV 18 television channel on Thursday.business Updated: Jul 15, 2010 15:47 IST
The federal government will compensate state refiners for at least half of their revenue losses on sale of fuel at discounted rate in the local market, Oil Secretary S Sundareshan told CNBC-TV 18 television channel on Thursday.
Last month, India granted autonomy to oil firms to fix retail prices of gasoline and raised prices of diesel, kerosene, and cooking gas.
The government pays cash subsidies to state-run oil retailers while upstream companies--Oil & Natural Gas Corp, Oil India Ltd and GAIL (India) --sell crude oil and products at a discount.
He also said there was a scope for government stake sale in ONGC and Indian Oil Corp.
Sundareshan said upstream companies, or explorers, would bear about one-third of the estimated 520 billion rupees (about $11.13 billion) in revenue losses of state-run fuel retailers in the current financial year.
"The government in any case is committed to bear at least 50 percent of the under recoveries (revenue loss on fuel sales)," he said, adding that the payout could even go up to 67 percent.
The federal government paid about 260 billion rupees ($5.6 billion) in fuel subsidies in the 2009/10 fiscal year, he said.
The extent of subsidy payout would also depend on the performance of the state-run oil retailers in the next few quarters, Sundareshan said.
At the current prices, oil marketing firms would suffer a revenue loss of 80 billion to 90 billion rupees on local sale of diesel, he said.
"The government has no intention of indicating any increase in the price of diesel.... This is something we can live with and need not be unduly bothered about when this price is going to be completely deregulated," Sundareshan said, when asked about the timeframe for freeing up diesel prices.