Budget cuts petroleum subsidy by half

Oil firms capital expenditure is seen rising 5% to Rs 76,565 cr

The government has budgeted for petroleum subsidy to come down by a half to Rs 30,000 crore in the next financial year 2015-16 from Rs 60,270 crore in the current financial year aided, largely, by a historic decline in crude oil prices between June and December 2014. Also, oil firms' capital expenditure in the new financial year is seen rising 5 per cent to Rs 76,565 crore, Budget documents show.

The Budget for the coming year provides for Rs 30,000 crore for government's burden of petroleum subsidy towards liquefied petroleum gas (LPG) and kerosene. Of this, Rs 21,140 crore has been provided for transferring direct cash subsidy to cooking gas users under the direct benefits transfer for LPG (DBTL) scheme.

For kerosene, it has provided Rs 8,000 crore subsidy for 2015-16. In addition, Rs 860 crore has been provided for subsidy payable to the Northeastern region. The government has also revised the current financial year's budgeted petroleum subsidy expenditure of Rs 63,000 crore to Rs 60,270 crore. This subsidy is given to state-owned oil companies to make up for losses incurred on subsidised sales of LPG and kerosene.

The Budget also provides for a 5 per cent increase in oil companies' capital expenditure to Rs 76,565 crore in 2015-16 as compared to the revise estimate of the current financial year. This includes ONGC's Capex (capital expenditure) rising to Rs 36,249 crore from Rs 34,813 crore in current financial year and Oil India's Capex rising 11 per cent to Rs 3,900 crore even as OVL's Capex is seen dipping to Rs 10,400 crore from Rs 12,300 crore in 2014-15.

The downstream companies will invest Rs 20,256 crore in the new financial year with Indian Oil's investment going up by 10.5 per cent to Rs 9,407 crore. It will invest additional Rs 1,000 crore in exploration and production. Hindustan Petroleum Corp's Capex is seen dipping 7 per cent to Rs 1,636 crore and Bharat Petroleum Corp's capex rising 11.6 per cent to Rs 5,101 crore. Gas utility GAIL (India) will invest Rs 2,704 crore in 2015-16 as compared to Rs 2,131 crore in the current financial year.