Oil and Natural Gas Corp is likely to pay about Rs 17,000 crore this financial year to subsidise petrol, diesel, domestic cooking gas and kerosene.
"During first half of 2007-08 fiscal, we paid Rs 7,448 crore subsidy... For the full year we expect the payout to cross Rs 17,000 crore," Oil and Natural Gas Corp (ONGC) chairman and managing director RS Sharma said in New Delhi.
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 cooking gas (LPG) and PDS kerosene. 42.7 per cent of the under-realisation is borne by the government by way of issue of oil bonds and the rest oil retailers absorb.
Sharma said 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 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.
Prime Minister Manmohan Singh has constituted a Group of Ministers (GoM) headed by External Affairs Minister Pranab Mukherjee to look into fuel pricing issues.
The GoM, which has not met even once since its constitution in November, is likely to meet this month to deliberate on Petroleum Ministry's proposal for a marginal fuel price hike combined with a cut in duties.
An increase of one rupee a litre in petrol price would cut under-recoveries by Rs 90 crore a litre and the same on diesel would slash the loss by Rs 360 crore a month.
If the Government hikes kerosene price by the same amount, losses would come down by Rs 95 crore per month and if LPG prices were raised by Rs 10 a cylinder, they would come down by Rs 58 crore per month.
A reduction in excise duty by Re 1 per litre on petrol and diesel would reduce the under-recoveries of oil companies by Rs 1,380 crore and Rs 5,270 crore respectively.