The Finance Ministry will give Rs 12,000 crore (Rs 120 billion) in cash to Indian Oil, Hindustan Petroleum and Bharat Petroleum to cover for less than half of the losses they incurred on selling LPG and kerosene this fiscal.
The compensation, which the Finance Ministry insists is for the full 2009-10 fiscal, is inadequate to cover even the Rs 20,872 crore loss the three retailers incurred on selling cooking fuel during April-December period, Petroleum Secretary R S Pandey said.
"The government had (in July 2009) decided to compensate oil marketing companies for the entire under-recovery (revenue loss) they incur on selling LPG and kerosene (below cost). What we have received is inadequate and (so) we will continue to pursue the matter with the Finance Ministry," he said.
Upstream firms Oil and Natural Gas Corp, GAIL and Oil India Ltd will continue to bear the entire revenue loss on petrol and diesel as had been agreed in July, he said. "We will review the mechanism this quarter (if finance ministry fails to give more compensation)," he said. IOC, BPCL and HPCL are projected to lose Rs 47,400 crore (Rs 474 billion) on selling petrol, diesel, LPG and kerosene this fiscal.
They may lose about Rs 30,000 crore (Rs 300 billion) on cooking fuel alone. S Sundareshan, Special Secretary in the Oil Ministry, said IOC would get Rs 7,000 crore (Rs 70 billion) while BPCL and HPCL would get Rs 5000 crore (Rs 50 billion) and actual cash would flow after Parliament approves the additional spending.
