No word heard yet on Rs 10K cr demand for oil PSUs: Reddy

Oil Minister S Jaipal Reddy today said that his ministry has sought an immediate release of Rs 10,000 crore in interim compensation to state oil companies, which are losing Rs 290 crore everyday on selling auto and cooking fuel below cost.

"We have urged Finance Ministry to provide Rs 10,000 crore for third quarter," he told reporters here. "We have not heard anything so far."

Oil Ministry wants the government to bear at least 55 per cent of the total under-recoveries (the revenue state retailers lose on selling diesel, domestic LPG and kerosene below cost).

With international crude oil prices topping USD 90 per barrel, Indian Oil Corp (IOC), Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL) are projected to lose Rs 73,600 crore in revenues in full 2010-11 fiscal.

So far, the Finance Ministry has committed to make up only one-third of the revenue losses from the budget.

The Finance Ministry has so far sanctioned Rs 13,000 crore to cover part of under-recoveries in the first half of the current fiscal, a ministry official said.

Without government subsidy, HPCL and BPCL are sure to report net loss in the October-December quarter and IOC too may end the three months in red.

"With food inflation at uncomfortable levels of 15.6 per cent, it is difficult to raise prices just now as any increase in diesel or even LPG rates would have a cascading impact on prices of essential commodities," he said. "We are looking at Finance Ministry for help in these difficult times."

The government had in 2008-09 given Rs 71,292 crore out of the Rs 103,292 crore total revenue loss on selling fuel below cost in the fiscal. "This was 69 per cent of the total under-recovery and during current fiscal, which has also seen hardening of crude prices, we are seeking just 55 per cent," he said.

The three fuel retailers are losing Rs 6.99 per litre on diesel, Rs 19.60 per litre on kerosene and Rs 366.28 per 14.2-kg LPG cylinder.

"There was a meeting of the Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee scheduled for last week of December to consider a hike in diesel and LPG rates, but it was postponed," the official said.

"Without the price hike, the gap between domestic retail price and their international benchmark is widening," he added.