Oil ministry sees 2015/16 upstream subsidy at 50-60 billion rupees

NEW DELHI (Reuters) - India expects a subsidy burden of 50 billion-60 billion rupees ($788 million-$946 million) for state-run oil and gas producers this fiscal year if world oil prices stay at current levels, a senior oil ministry source said on Monday.

Upstream companies like ONGC , Oil India and GAIL (India) typically sell crude and fuels like cooking gas at discounted rates to partly compensate retailers for losses they incur on selling fuels at government-set rates. But the government is now planning to ease the subsidy burden.

Sources had told Reuters earlier that the oil ministry had set a new subsidy formula for the April-June quarter that would exempt upstream companies from discounting sales of crude oil and refined products if global oil prices are up to $60 per barrel.

 

On Monday, the oil ministry source however said the previous formula has been junked and the finance ministry will pay a cash subsidy of 12 rupees for a litre of kerosene sold while ONGC and Oil India will share the remainder of the burden.

It was not immediately clear how much subsidy the upstream companies paid last year.

($1 = 63.4200 rupees)

(Reporting by Nidhi Verma; Editing by Sunil Nair)