Government exempts ONGC, Oil India from fuel subsidy payment in Q3 over slump in oil prices

Government has exempted state-owned ONGC and Oil India from payment of fuel subsidy in the third quarter ended December 31, as slump in oil prices dented their revenues.

As per a new fuel subsidy sharing formula approved last year, upstream firms Oil and Natural Gas Corp (ONGC) and OIL have to make good any revenue loss incurred by fuel retailers on selling kerosene through PDS and domestic LPG after taking into account the fixed subsidy provided by the government.

For the October-December period, retailers Indian Oil Corp (IOC), Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL) lost Rs 6,149 crore in revenue on selling kerosene and LPG at government fixed retail price.

Of this, the government as per the agreed formula was to pay a subsidy of Rs 12 per litre on kerosene and Rs 18 per kg on LPG. The unmet revenue loss after accounting for this subsidy was coming to close to Rs 300 crore, official sources said.

The government has decided to bear this loss as well and pay all of the Rs 3,279 crore subsidy on LPG and Rs 2,870 crore on kerosene for the quarter, they said.

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