ONGC, OIL exempted from burden of cooking gas subsidy

State-run oil and gas exploration companies have been exempted from sharing the subsidy on cooking gas for the current fiscal, a top official said on Tuesday.

"Government will fully meet subsidy burden of LPG in 2015-16," Petroleum Secretary Saurabh Chandra said at a roundtable on hydrocarbons organised by industry chamber FICCI here.

"This will leave a lot more money in the hands of the upstream companies to invest in exploration and production. This puts a huge pressure on them to step up the exploration and production activities," he added on the rationale behind the move.

Chandra said the government has exempted Oil and Natural Gas Corporation (ONGC) and Oil India (OIL) from payment of fuel subsidy in the fourth quarter after the finance ministry agreed to make up for the revenue loss on subsidised fuel sales.

ONGC and OIL will have to bear subsidy on only kerosene in 2015-16, he added. After diesel was deregulated in October 2014, the subsidy sharing was limited to LPG and kerosene.

Both state oil companies would invest $6 billion in exploration and production during 2015-16, as they look to reverse the declining oil and gas production, Chandra said.

The finance ministry will pay Rs.5,324 crore in fuel subsidy for the January-March quarter, he added.