India asks state oil producers to pay $1.75 billion subsidy for Dec quarter - source

By Nidhi Verma

NEW DELHI (Reuters) - India has asked oil producers to provide 108.96 billion rupees ($1.8 billion) in subsidies to cover some of the losses of state retailers selling fuel at government-set low rates, a source familiar with the plan said on Thursday.

In addition, the federal finance ministry has agreed to support the retailers with a 50.85 billion rupee subsidy for the December quarter, according to the government source, who asked not to be named as he is not authorised to speak to the media.

India regulates retail prices of liquefied petroleum gas and kerosene to keep prices under check.

 

State-run producers Oil and Natural Gas Corp , Oil India Ltd and GAIL (India) sell crude and related products at a discount to the retailers, who also get cash subsidies from the government for selling fuel at below market rates.

The source said three fuel retailers: Indian Oil Corp , Bharat Petroleum Corp and Hindustan Petroleum Corp , had suffered lost revenue of 159.81 billion rupees during the quarter.

IOC, the country's biggest refiner and fuel retailer, will get a subsidy of 89.82 billion rupees. HPCL will get 35.86 billion rupees and BPCL 34.13 billion, the source said.

"ONGC will pay a subsidy of 94.58 billion rupees while Oil India's share is pegged at 14.38 billion rupees. We have exempted GAIL from paying the subsidy during the quarter," the source told Reuters.

The three retailers will announce their December quarter results on Friday.

($1=62.30 rupees)

(Editing by Liisa Tuhkanen and David Holmes)