May 20: After days of rumours, the government on Friday finally raised the subsidy burden of the upstream PSU oil companies ONGC, Oil India and GAIL from 33 per cent of the total loss suffered on sale of fuel to 38.8 per cent for 2010-11.This would mean a burden of a little over Rs 30,000 crore. With government unable to pass the full increase in the international crude oil prices to the consumers, upstream companies have to bear a higher burden sources said.
The three-state run oil marketing companies — IOC, HPCL and BPCL, incurred Rs 78,000 crore loss for selling diesel, LPG and domestic cooking gas at subsidised rates in 2010-11. ONGC, Oil India and GAIL have been asked to pay Rs 30,295.75 crore towards compensation to the oil marketing companies.
Government on its part will pay Rs 41,000 crore cash to the oil marketing companies. Since Pranab Mukherjee has become the finance minister he has done away with the practice of giving bonds to oil marketing companies for their losses. Mr Mukherjee believes that paying cash give the true picture of the government's fiscal position than oil bonds which were kept off the books. ONGC has been hit the hardest as it will be paying 80.5 per cent of the total upstream share of the oil subsidy. ONGC will pay Rs 24,892 crore, OIL Rs 3,293 crore and GAIL Rs 2,111 crore.
“We are giving Rs 3,832 crore more in subsidy that we had projected earlier. Our profits will be adversely impacted by Rs 2,000 crore due to this additional subsidy outgo,” said ONGC chairman and managing director, Mr A. K. Hazarika. He said that company’s capex will not be impacted by the higher subsidy outgo and that it would invest the planned `30,000 crore this fiscal. ONGC’s share was down by 1.17 per cent on the Bombay Stock Exchange on Friday. However on Tuesday it had lost 6.6 per cent when the news was unofficially first aired by the news channels.
The three-state run oil marketing companies — IOC, HPCL and BPCL, incurred Rs 78,000 crore loss for selling diesel, LPG and domestic cooking gas at subsidised rates in 2010-11. ONGC, Oil India and GAIL have been asked to pay Rs 30,295.75 crore towards compensation to the oil marketing companies.
Government on its part will pay Rs 41,000 crore cash to the oil marketing companies. Since Pranab Mukherjee has become the finance minister he has done away with the practice of giving bonds to oil marketing companies for their losses. Mr Mukherjee believes that paying cash give the true picture of the government's fiscal position than oil bonds which were kept off the books. ONGC has been hit the hardest as it will be paying 80.5 per cent of the total upstream share of the oil subsidy. ONGC will pay Rs 24,892 crore, OIL Rs 3,293 crore and GAIL Rs 2,111 crore.
“We are giving Rs 3,832 crore more in subsidy that we had projected earlier. Our profits will be adversely impacted by Rs 2,000 crore due to this additional subsidy outgo,” said ONGC chairman and managing director, Mr A. K. Hazarika. He said that company’s capex will not be impacted by the higher subsidy outgo and that it would invest the planned `30,000 crore this fiscal. ONGC’s share was down by 1.17 per cent on the Bombay Stock Exchange on Friday. However on Tuesday it had lost 6.6 per cent when the news was unofficially first aired by the news channels.