Oil PSUs gain on talk of fuel subsidy support

Shares of state-owned oil marketing companies such as Hindustan Petroleum, Bharat Petroleum and Indian Oil Corporation were trading 2-4% higher on talk that the government has sought fuel subsidy support from upstream oil companies for the first quarter ended June 30, 2014.

The Oil Ministry has fixed the subsidy payout by upstream firms like Oil and Natural Gas Corp (ONGC) and Oil India Ltd at Rs 15,546.65 crore for the April-June quarter, a PTI report said.

Of this, ONGC will pay Rs 13,200.10 crore and another Rs 1,846.55 crore will come from OIL. State gas utility GAIL will pay Rs 500 crore, PTI said citing official sources.

Of this, IOC will get Rs 8,107.21 crore, BPCL Rs 3,830.56 crore and HPCL Rs 3,608.88 crore.

State-owned oil marketing firms sell diesel and cooking fuels such as domestic LPG and kerosene at government controlled rates which are way below cost prices. The losses incurred by these firms are compensated by way of cash subsidy from the government and subsidy support from upstream companies such as ONGC, Oil India and GAIL.