Oil marketing companies likely to settle for Rs12,000 crore sop

Instead of the Rs30,000 crore in oil bonds that the petroleum and natural gas ministry was seeking, the finance ministry yesterday agreed to grant just Rs12,020 crore in cash to the three oil marketing companies – all of them government controlled – to partly compensate their losses on selling fuel at subsidised rates.

According to reports, the finance ministry has sent a letter to the petroleum ministry saying that Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) will be paid Rs12,020 crore to cover their losses on sale of domestic liquefied petroleum gas (LPG) and kerosene below cost in 2009-10.

At their meeting on Thursday, petroleum minister Murli Deora had pleaded with finance minister Pranab Mukherjee for making up the entire loss on cooking fuel (kerosene and LPG) by way of either oil bonds or cash. It was agreed that losses on petrol and diesel would be borne by upstream producers Oil & Natural Gas Corp and Oil India Ltd.

''No decision was taken ... we have not reached any finality on the issue,'' Deora told reporters after the meeting.

"Most likely it (subsidy) is going to be cash," petroleum secretary R S Pandey added.

He said no decision had been taken on the amount of compensation to be given by the finance minister.
"Discussions were held and we hope to hear from them soon," Pandey added.