State-run oil marketing companies (OMCs) would receive subsidy payout of Rs 8,000 crore during the Apr-Jun quarter for selling fuel products like diesel, kerosene and LPG at below market price.
The finance ministry issued a letter to this effect to Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL).
These three firms incurred under-recovery of Rs 25,579 crore on selling diesel, domestic LPG and kerosene below cost in the April-June quarter.
While IOC will get cash subsidy of Rs 4,261.29 crore, BPCL Rs 1,916.57 crore and HPCL Rs 1,822.14 crore for the April-June quarter.
However, the total amount is far lower than the Rs 11,451 crore sought by the oil ministry for the first quarter of the fiscal.
State-run oil firms like Oil and Natural Gas Corp (ONGC), Oil India (OIL) and GAIL India would contribute Rs 15,303.84 crore to OMCs for the under-recovery.
While the government bears a third of the revenue losses or under recoveries that retailers incur on selling fuel at government controlled rates, upstream firms contribute a substantial portion by way of discount on crude oil and LPG they sell to retailers.