The finance ministry may offer oil marketing companies a Rs.12,020 crore as compensation for underwriting their losses - less than half of what the petroleum ministry has demanded.
According to a senior petroleum ministry official, the three oil sector giants -- Indian Oil, Bharat Petroleum and Hindustan Petroleum -- will be given the compensation in cash.
The total losses due to subsidised retail prices and high global crude prices projected for the companies this fiscal are Rs.45,000 crore. The petroleum ministry has, however, sought a compensation of only Rs.31,700 crore.
Petroleum and Natural Gas Minister Murli Deora met Prime Minister Manmohan Singh Wednesday and Finance Minister Pranab Mukherjee Thursday over the financial health of the oil companies.
Petroleum Secretary R.S. Pandey had then said that the finance ministry would pay in cash, which was an indication that the entire demand for compensation may not be immediately met.
The finance ministry apparently feels that oil prices this year have not been as volatile or as high as previous years, when oil price went up as high as $147 per barrel or 159 litres.
During the year of steep oil prices, the government reached a formula under which the finance ministry picked up the entire losses for cooking fuel, upstream companies like Oil and Natural Gas Corp and Oil India made up for the losses on auto fuels.
{{/usCountry}}During the year of steep oil prices, the government reached a formula under which the finance ministry picked up the entire losses for cooking fuel, upstream companies like Oil and Natural Gas Corp and Oil India made up for the losses on auto fuels.
{{/usCountry}}While the petroleum ministry will accept this latest cash payment, it will continue to ask for the full implementation of the earlier formula, the official said.
At current global prices, the three public sector companies are losing Rs.299 per cooking gas cylinder, Rs.17.23 per litre of kerosene, Rs.3.06 per litre of petrol and Rs.1.56 per litre of diesel.