Under-recoveries from subsidized fuel sales to fall by half

The Indian government expects under-recoveries of state oil firms from subsidized fuel sales to decline by 57% in fiscal year 2008-2009 to Rs1.05 trillion (US$21.45 billion), from an earlier estimate of Rs2.45 trillion (US$50.05 billion), due to the drop in global crude oil prices. India’s state-owned oil marketing companies have lowered gasoline prices by about 20% and gasoil by 12% over two reductions since December 2008. India’s union government will compensate state-owned oil firms with oil bonds for 50% of the firms’ under-recoveries and with discounts from upstream companies for 33% of their under-recoveries. (February 15, 2009)