The government has hiked the cash subsidy it will pay to state-owned oil firms for selling fuel below cost in current fiscal to Rs 65,000 crore but has also hiked the cess upstream firms like ONGC pay on crude oil production to Rs 4,500 per tonne.
"Crude petroleum oil produced in India attracts a cess of Rs 2,500 per tonne under the Oil Industries Development Act. This rate was last revised in Budget 2006-07. As a measure of indexation, I propose to increase the rate of cess to Rs 4,500 per tonne," Finance Minister Pranab Mukherjee said presenting Budget for 2012-13 in Parliament today.
The increase in cess would result in Oil and Natural Gas Corporation (ONGC) paying Rs 4,000 crore extra while Oil India Ltd would have to shell out Rs 800 crore additional. Cairn India, which was recently acquired by mining group Vendanta Resources, would have to shell out about Rs 1,000 crore at peak production from its Rajasthan oil block.
In the Budget, Mukherjee raised compensation the government will pay to Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp for selling diesel, domestic LPG and kerosene to Rs 65,000 crore for current fiscal as against Rs 20,000 crore provisioned in the budget estimate for 2011-12.
The three retailers are projected to lose over Rs 137,000 crore this fiscal, of which 42 per cent would come from upstream firms.
For the 2012-13, he provisioned Rs 40,000 crore towards fuel subsidy. After adding freight subsidy and fixed subsidy provided on PDS kerosene and LPG, the outgo has been pegged at Rs 43,580 crore.
