Union finance ministry agreed to pay Rs 45,000 crore to state-run oil marketing companies (OMCs) for incurring losses on sale of diesel, kerosene and cooking gas at below market price.
The Rs 45,000 crore is in addition to the Rs 55,000 crore already paid to the OMCs as compensation for under-recoveries. Thus, for the financial year 2012-13 as a whole, the government will pay Rs 100,000 crore to state-run OMCs as compensation.
Some reports indicate that the finance ministry may release the Rs 45,000 crore before the end of this month so that the OMCs may announce their annual results for 2012-13 with some profits.
The OMCs - Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) - have incurred about Rs 161,000 crore revenue losses on in 2012-13. State-run upstearm companies such as ONGC and Oil India have contributed 45,000 crore.
Thus, even after compensating Rs 100,000 crore, these OMCs incur an unmet revenue loss of about 16,000 crore for 2012-13, reports suggest.
Meanwhile, the finance ministry clearly told the oil ministry that the existing fuel pricing formula, which allegedly inflates government's fuel subsidy burden, will have to be changed from the current financial year.