Oil Ministry receives 12,000 crore cash subsidy
The petroleum ministry has received Rs 12,000 crore ($2.63 billion) as cash subsidy from the finance ministry to compensate the state-run oil marketing companies for selling fuel below the market price.
New Delhi: The petroleum ministry has received Rs 12,000 crore ($2.63 billion) as cash subsidy from the finance ministry to compensate the state-run oil marketing companies for selling fuel below the market price.
"We have got it and we have disbursed it," S. Sundareshan, special secretary at the Ministry of Petroleum, said on Tuesday.
The current subsidy, however, is less than half of what it had asked the Finance Ministry to give.
The ministry had sought a subsidy of Rs 31,700 crore as oil companies -- IOC, BPCL, HPCL -- are expected to make loses to the tune of Rs 45,000 crore in the current financial year.
The oil firms have been selling at a lower price despite the the upward swing of the crude oil prices to $80 a barell. Any hike in price will add to inflation which is set to touch a double digit figure.
The government had been issuing bonds to oil companies for selling oil at subsidised prices. The union budget 2009 had promised a subsidy of only Rs 1,11,276 crore for the oil companies and had not offered any provision for oil-bond subsidy.
Despite the repeated plea by the Petroleum Ministry to issue subsidy in oil-bonds, the finance ministry issued it in cash.
The government stopped issuing the high-interest rate oil-bonds after the Reserve Bank of India (RBI) stopped buying it because of the bourgeoning fiscal deficit.
In the fiscal year ended march 2009 the oil subsidy was Rs 75,850 crore.
Meanwhile, Petroleum Secretary R.S. Pande said the government would prepare a scheme before the end of the current fiscal to bear the cost of subsidised sale of fuel.