Oil firms' subsidy bill seen at Rs 6,500 crore

 The move has been dictated by a number of factors: the sudden spurt in international prices of crude and petroleum products, the bleak prospects of the market turning soft in the near future and the downward revision in subsidy rates.

 At the beginning of the year, the ministry had estimated that under-recoveries by oil companies on account of the sale of the two subsidised cooking fuels would amount to Rs 5,430 crore. It is now of the view that this figure can cross Rs 6,500 crore.

 International prices of the benchmark Brent (dated) crude have moved up from $25.28 a barrel a month ago to around $29.70 a barrel now.

 With the onset of winters in the West and oil stocks in the US, the biggest market for oil in the world, running precariously low it is expected that crude prices will continue to rule high for the rest of the current financial year.

 Also, the subsidy on kerosene has been lowered from Rs 2.45 a litre to Rs 1.63 a litre and on domestic LPG from Rs 67.75 a cylinder to Rs 45.17 a cylinder.

 The new under-recovery estimates are the basis of the formula being worked out by the government to apportion these losses among oil companies