PSU oil companies fully compensated for fuel subsidies: minister

Public sector oil marketing companies (OMCs) were fully compensated for losses incurred on subsidised sale of fuels like petrol, diesel, domestic cooking gas and kerosene in fiscal 2008-09 through issue of oil bonds and price discounts from upstream oil companies life ONGC, minister for petroleum and natural gas Murli Deora informed the Rajya Sabha on Monday.

Public sector oil marketing companies, viz, Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), together incurred under-recoveries of Rs1,03,292 crore on the sale of petroleum fuels during the year 2008-09, the minister said.

The government, last year, issued oil bonds worth Rs71,292 crore while upstream oil PSUs like ONGC contributed Rs32,000 crore to the OMCs through price discounts on crude oil and finished products during the year 2008-09, he said. 

In addition, the upstream oil companies also contributed Rs943 crore towards import losses of OMCs. With this, financial support to OMCs in the form of oil bonds and upstream contribution have fully met production costs, he said.

The under recoveries are due to the government administered retail prices of the four sensitive petroleum products - petrol, diesel, PDS kerosene and domestic LPG.

He said the government administered prices are meant to protect domestic consumers from the volatility of international oil prices. The government, he said, however, compensates the OMCs through issue of oil bonds to ensure their financial health.