Govt rejects panel's idea on oil subsidy sharing - Sify

The petroleum ministry has rejected the crude oil matrix-based subsidy-sharing formula for Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL), as suggested by the expert committee headed by Kirit Parikh. The ministry, however, wants to keep the share of these companies, along with GAIL India, at a third of total underrecoveries.

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The gross underrecoveries incurred by oil marketing companies (OMCs) on selling auto and cooking fuels below the market price is expected to be around Rs 53,100 crore at a crude oil price level of $75 a barrel. Of this, the total burden on ONGC, GAIL and OIL would come to around Rs 17,700 crore this year, according to the one-third-sharing mechanism. "The upstream companies had been contributing for a third of the underrecoveries. It is the maximum that they will be made to bear this year also, depending on their financial performance," petroleum secretary S Sundareshan told Business Standard. A group of ministers had on June 25 partially accepted the Kirit Parikh committee report on petroleum pricing, when it decontrolled petrol prices and said diesel prices, too, would be decontrolled. It left the issue of upstream sharing open. Sundareshan said discussions on the mechanism for burden-sharing would be worked out after discussions with the finance ministry.

Govt rejects panel's idea on oil subsidy sharing - Sify