Oil Minister Murli Deora today met Finance Minister Pranab Mukherjee to seek cash compensation for state-run oil companies which have lost over Rs 31,000 crore on selling fuel below cost in the first half of the current fiscal.
"We asked the finance minister to meet at least 50 per cent of the under recoveries (revenue loss)," Deora said after the meeting.
Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum lost Rs 31,367 crore in revenues during the April-September quarter on selling diesel, domestic LPG and kerosene below cost. This includes Rs 2,227 crore they lost on selling petrol below cost till June 25 when its pricing was freed from government control.
Of this revenue loss, upstream oil firms Oil and Natural Gas Corp (ONGC), GAIL India and Oil India will make up for Rs 10,456 crore and about Rs 10,000 crore has so far been committed by the government by way of cash compensation.
"We want the government compensation to be at least Rs 15,000 crore," Deora said. "Mukherjee was positive on our demand and we hope he will oblige us."
The government on June 25 freed petrol price from its control resulting in a hike of Rs 3.50 per litre. Rates have subsequently been raised twice by almost a rupee, in step with rise in international rates. Petrol now costs Rs 52.55 a litre in Delhi.
Diesel prices were raised by Rs 2 per litre on June 25, and it was stated then that they will be gradually freed. But deregulation of diesel prices has been put off for now as the move would mean a further increase in the price by Rs 2.87 a litre. Diesel currently costs Rs 37.71 a litre in Delhi.
In June, the government had also raised domestic LPG price by Rs 35 per 14.2-kg cylinder and kerosene rates by Rs 3 per litre. Despite these hikes, state fuel retailers lose Rs 16 on sale of every litre of kerosene, and Rs 188 per LPG cylinder.