India’s Finance Ministry doles out US$1.76 billion in fuel subsidy

The Finance Ministry approved Rs.8,000 crore (US$1.76 billion) in cash subsidy to state-owned fuel retailers to make up for half of the revenues they lost on selling diesel fuel, domestic LPG and kerosene below cost in the third quarter. The Finance Ministry has issued a letter approving the cash compensation for the October-December quarter, according to Petroleum and Natural Gas Ministry sources. Upstream firms Oil and Natural Gas Corporation (ONGC), Oil India Ltd. (OIL) and GAIL (India) made up Rs.5,198 crore (US$1.14 billion), by way of discounts on crude oil and petroleum products they sold to the three state-owned fuel retailers, Indian Oil Corp., Bharat Petroleum Corp. Ltd., and Hindustran Petroleum Corp. Ltd. , who postponed announcing their third quarter financial results in anticipation of the government subsidy announcement, without which they would have posted losses. (February 1, 2011)