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The Union Cabinet on Wednesday gave its approval for one-year extension of the kerosene and domestic liquefied petroleum gas (LPG) subsidy scheme apart from the freight subsidy scheme for far-flung areas. The schemes will be valid till March 31, 2015.
“The approval will help in reducing the under-recovery of the oil marketing companies (OMCs),” an official statement said.
The government had been providing a subsidy of Rs 22.58 on every 14.2-kg LPG cylinder and Rs 0.82 on every litre of kerosene sold through the public distribution system (PDS) under the first scheme.
The subsidy under the scheme is provided on sales of kerosene made by participating companies under the public distribution system system and liquefied petroleum gas cylinders for domestic use. The quantity of PDS kerosene on which subsidy is allowed for each state are limited to the allocations made by the oil ministry.
Besides, freight subsidy was also being provided to PDS kerosene and domestic LPG consumers in far-flung areas under the second scheme. Both the schemes, initiated in 2002, ended on 31 March 2014.
The scheme covers Northeastern states, including Sikkim, Jammu & Kashmir, Andaman & Nicobar islands and Lakshadweep islands.
Currently, Indian Oil Corporation, Bharat Petroleum Corporation, Hindustan Petroleum Corporation and IBP Company Ltd are allowed to participate in the two schemes.
Oil ministry’s technical arm Petroleum Planning and Analysis Cell analyses the companies’ subsidy claims and forwards the claims to the ministry.
