The Hindu Business Line : Oil majors to bear Rs 6,000-cr burden in Q1

Upstream oil and gas companies — Oil and Natural Gas Corporation, GAIL (India), and Oil India — will now have to shell out Rs 6,000 crore for the first quarter of this fiscal as part of the burden-sharing arrangement worked out by the Government. This is to cushion the impact of high volatility in the international crude price suffered by the oil marketing companies (OMCs). According to official sources, it would also lessen the burden on the balance sheets of OMCs such as Indian Oil Corporation, IBP, Bharat Petroleum, and Hindustan Petroleum.

Despite the Government revising the prices of petrol and diesel on June 5 by Rs 4 and Rs 2 per litre respectively, the OMCs continued to feel the impact of high international crude prices, as they were selling the products below the cost price. As per the burden sharing arrangement, the upstream oil companies will contribute Rs 6,000 crore in the first quarter of the current fiscal.

Contribution break-up

ONGC will be taking the maximum burden and contribute Rs 5,120 crore, while OIL will have to fork out Rs 588 crore and GAIL Rs 292 crore. Of this Rs 6,000 crore, Indian Oil (including IBP) will get the largest share of the pie at Rs 3,383 crore. BPCL will get Rs 1,380 crore and HPCL Rs 1,237 crore.

Apart from this, the upstream companies will continue to provide discounts to the refineries. This follows a Cabinet decision that had said that they will take subsidy burden of Rs 24,000 crore in the full year.

As regards contribution from the standalone refiners including private sector refiners, the Petroleum Ministry is likely to convene a meeting soon. Standalone refiners contributed Rs 1,500 crore to the burden-sharing arrangement in 2005-06.

The OMCs are loosing Rs 5.48 per litre on petrol and Rs 7.77 per litre on diesel as on July 16 in spite of the price revision on these two products.

The calculation for petrol and diesel under realisation is done on fortnightly basis by the retail companies, and that of LPG and kerosene is done on a monthly basis.

The OMCs are losing Rs 143 on sale of 14.2 kg domestic cooking gas cylinder and Rs 17.95 per litre on kerosene.