India’s oil minister seeks support to offset losses incurred by fuel retailers

India’s Ministry of Petroleum and Natural Gas has asked the Ministry of Finance for about Rs610 billion (US$11 billion) to offset losses incurred by state-run oil marketing firms for selling petroleum products at government-controlled prices during the April-September period of the current fiscal year (2012-13), Oil Secretary G.C. Chaturvedi said. Speaking at the 2012 Economic Editors’ Conference, Chaturvedi explained that the total revenue loss incurred by fuel retailers Indian Oil Corp. Ltd., Bharat Petroleum Corp. Ltd. and Hindustan Petroleum Corp. Ltd. in the first half of the current fiscal year amounted to Rs890 billion (US$16.2 billion) for the three subsidized fuels: diesel, domestic cooking gas and kerosene.
Of the total amount, Indian state-run upstream firms, Oil and Natural Gas Corp. Ltd., Oil India Ltd. and GAIL India Ltd., will contribute Rs280 billion (US$5 billion). During the first quarter, these firms have already shared Rs140 billion (US$ 2.5 million) of the subsidy burden and a similar amount is expected in the second quarter, Chaturvedi added. The under-recovery of the state-run fuel retailers for the period April-June amounts to Rs470 billion (US$8.5 billion), while the amount during the second quarter came down to Rs420 billion (US$ 7.6 billion).
At the moment, there does not seem to be any indication that there would be further increases in diesel and domestic LPG prices, according to the petroleum minister. Meanwhile, the Finance Ministry has written to all ministries seeking cash in their first supplementary demand for grant, which is expected in the coming winter season. (October 12, 2012)