India considers changes in subsidy formula

India plans to study changing the subsidy burden-sharing formula under which state-run oil marketing companies are compensated for selling gasoline, gasoil, kerosene and LPG at below production costs, according to R.S. Pande, the secretary and top official in the Ministry of Petroleum and Natural Gas. Currently, the government bears 50% of the subsidy burden through the issue of oil bonds to Indian Oil Corp. (IOC), Bharat Petroleum Corp. Ltd. (BPCL) and Hindustan Petroleum Corp. Ltd. (HPCL). Under government regulations, the state marketing companies are not allowed to raise product prices in proportion to increases in global crude benchmarks, but the three retail companies have occasionally been allowed to raise prices for gasoil and gasoline. (November 28, 2008)