Oil subsidy burden

Exploration firms Oil and Natural Gas Corporation, Oil India Ltd and Gail (India) Ltd may have to bear Rs 1,400 crore as liquiefied petroleum gas (LPG) and kerosene subsidy burden in the second quarter of 2004-05.

The three companies, who do not retail LPG or kerosene, had given about Rs 1,200 crore in the first quarter to oil marketing companies, BPCL, IOC and HPCL to compensate them for the under-recoveries on selling the two mass consumed cooking fuels.

Petroleum minister Mani Shankar Aiyar said, "upstream companies have got windfall profits due to the surge in crude oil prices. They will have to share their spoils."

Subsidy burden on LPG and kerosene, arising out of the government's decision not to increase prices despite rise in cost, is estimated at Rs 4200 crore in july-september, of which one-third would be borne by the ongc, gail and oil. An equal amount would be provided by the government by way of direct subsidy while the remaining would be borne by the oil marketing companies (omcs).

"All of them will have to share it (the burden) equitably," aiyar said declining to disclose the numbers.