Govt not to subsidise private oil firms' losses
Government has capped the retail prices of fuel in a bid to shield the economy from soaring crude oil prices.india Updated: Aug 04, 2006 16:22 IST
The Government on Friday rejected Reliance Industries Ltd's demand for compensation equal to public sector oil firms, to make up for the losses it suffered on petrol and diesel sales.
"There is no question of giving compensation to Reliance," Petroleum Minister Murli Deora told reporters in New Delhi.
RIL is losing Rs 3.37 per litre on petrol and Rs 5.77 a litre on diesel, despite pricing the auto fuels about Rs 2.50 a litre higher than the price charged by PSU firms, who are compensated for the losses through a combination of discounts from upstream companies like ONGC and issue of oil bonds.
"There is no need to favour only the PSU oil marketing companies (OMCs) in a partisan and non-transparent manner. Provision of similar support to the private sector does not increase the financial burden of the Government of India since denial of the support will only shift volumes from the private sector to PSUs to whom an equivalent subsidy will need to be paid," RIL had recently written to the Petroleum Ministry.
Deora said the Cabinet had in June decided on a burden sharing formula where the government, the oil firms and consumers were to share the impact of surging crude oil prices.
"There is no proposal to give subsidy to Reliance," he said.
Reliance had suggested an increase in the cess on domestic crude and use the revenue to moderate the excise duty on petrol and diesel, so as to place all players at par.
"Alternatively, oil bonds and upstream support should be extended to the private companies," it said.