Oil Minister Murli Deora today met Finance Minister Pranab Mukherjee to seek immediate release of Rs 10,000 crore in interim compensation to state oil companies which are losing Rs 275 crore everyday on selling auto and cooking fuel below cost.
"I met Mukherjee here and demanded that the government bear at least 55 per cent of the total under recoveries (the revenue state retailers lose on selling diesel, domestic LPG and kerosene below cost)," Deora told PTI after the meeting.
With international crude oil prices topping USD 90 per barrel, Indian Oil Corp (IOC), Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL) are projected to lose Rs 72,812 crore in revenues in full 2010-11 fiscal.
So far, the finance ministry has committed to making up only one-third of the revenue losses from the budget.
"The Finance Minister has been kind enough to sanction Rs 13,000 crore to cover part of under-recoveries in the first half of the current fiscal. I requested him to release another Rs 10,000 crore for third quarter under-recoveries immediately to help PSUs post decent Q3 results," Deora said.
Without government subsidy, HPCL and BPCL are sure to report net loss in the October-December quarter and IOC too may end the three months in red.
"With food inflation crossing 18 per cent, it is difficult to raise prices just now as any increase in diesel or even LPG rates would have a cascading impact on prices of essential commodities," he said. "We are looking at Finance Minister for help in these diffiult times."
The government had in 2008-09 given Rs 71,292 crore out of the Rs 103,292 crore total revenue loss on selling fuel below cost in the fiscal. "This was 69 per cent of the total under-recovery and during current fiscal which has also seen hardening of crude prices, we are seeking just 55 per cent," he said.
The three fuel retailers are losing Rs 6.99 per litre on diesel, Rs 19.60 per litre on kerosene and Rs 366.28 per 14.2-kg LPG cylinder.
"There was a meeting of the Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee scheduled for last week of December to consider a hike in diesel and LPG rates, but it was postponed," Deora said.
"Without the price hike, the gap between domestic retail price and their international benchmark is widening," he added.
