Delay in subsidy reimbursement worries bleeding OMCs

FinMin yet to repay Rs 900 cr for funds moved under Direct Benefits Transfer

Five months after the scheme to directly transfer subsidy for cooking gas was launched, the finance ministry is yet to reimburse about Rs 900 crore to oil marketing companies (OMCs) for the funds they have transferred to consumers.

“Together, all the oil marketing companies have transferred about Rs 900 crore,” said a senior official of an oil marketing company. This financial year, the underrecoveries on sensitive petroleum products are expected to touch Rs 1,40,000 crore.

A petroleum ministry official said all the funds OMCs had spent so far would be reimbursed. “We have already raised the demand with the Ministry of Finance, and we will be getting it in the supplementary demand that will be raised in the winter session of Parliament,” the official said, requesting anonymity.

The official dismissed this as “not a major issue”, saying the companies would get the money only “post-factor”, according to a Cabinet decision. However, as it stands, the Direct Benefits Transfer (DBT) scheme has added to the woes of OMCs, which have to incur cash outgo on subsidy payments in districts where DBT has been launched.

The subsidy to the consumer has two components — the advance (Rs 435) and the actual subsidy the consumer gets after the delivery. The ministry official said OMCs were supposed to get the fist part in advance, while the second component (actual subsidy) would be received a quarter later, as reimbursement. Earlier, OMCs received the total amount after a year, through the subsidy-adjustment mechanism. “We have projected this demand for DBTL (DBT for liquefied petroleum gas consumers) districts and sent it to the Ministry of Finance. But it will happen in December,” the official said.

“We successfully implemented the DBTL scheme, but we are yet to be reimbursed on the cash advance made to the end consumer and the claims pertaining to the cash transfer of subsidies are yet to be settled,” said the director (liquefied petroleum gas) of an oil marketing firm.

OMCs have suggested the one-time cash advance paid to cash transfer-compliant consumers in DBTL districts be recovered from them in 10-12 equal instalments.

For the first fortnight of November, the underrecoveries on diesel stood at Rs 9.58 a litre, kerosene Rs 35.77 a litre and domestic liquefied petroleum gas Rs 482.41 a cylinder.