Govt may give cash subsidy to oil firms - oil secy

NEW DELHI Thu Jan 14, 2010 8:34pm IST

File photo of the Bharat Petroleum Corporation refinery in Mumbai, April 24, 2008. State oil companies may get cash instead of oil bonds as compensation from the government for selling fuel at below market prices, the oil secretary said on Thursday. REUTERS/Punit Paranjpe/Files

File photo of the Bharat Petroleum Corporation refinery in Mumbai, April 24, 2008. State oil companies may get cash instead of oil bonds as compensation from the government for selling fuel at below market prices, the oil secretary said on Thursday.

Credit: Reuters/Punit Paranjpe/Files

Related Topics

NEW DELHI (Reuters) - State oil companies may get cash instead of oil bonds as compensation from the government for selling fuel at below market prices, the oil secretary said on Thursday.

"Most likely it (subsidy) is going to be cash," R.S. Pandey told reporters after a meeting with Finance Minister Pranab Mukherjee.

He said no decision had been taken on the quantum of compensation to be given by the finance minister.

"Discussions were held and we hope to hear from them soon," Pandey said.

The oil ministry had sought 200 billion rupees ($4.4 billion) of bonds for state-run firms as compensation for 2009/10, following an upward swing in global crude prices, S. Sundareshan, the No. 2 official in the oil ministry, had said last month.

The government has been issuing bonds to cover losses at state oil refiners like Indian Oil Corp and Bharat Petroleum Corp Ltd, which are required to sell fuel at lower than market price to control inflation and help the poor.

In the fiscal year ended March 2009, the oil subsidy was 758.5 billion rupees as high global crude prices had inflated state-run oil firms' losses.

The oil bonds have swelled debt for the federal government, which is struggling with 16-year high fiscal deficit and record market borrowing of 4.51 trillion rupees for the fiscal year to March 2010.

(Reporting by Nidhi Verma; Editing by Ranjit Gangadharan)

(For more news on Reuters Money visit www.reutersmoney.in)

FILED UNDER:

Religion and Politics

REUTERS SHOWCASE

Fund Raising

Fund Raising

Flipkart raises $700 million in fresh funding.   Full Article 

Reforms Push

Reforms Push

Modi may order insurance, coal reforms if vote delayed - officials.  Full Article 

Reuters Exclusive

Reuters Exclusive

India looks to sway Americans with nuclear power insurance plan  Full Article 

To Boost Growth

To Boost Growth

Crank up public spending to revive growth - chief economic adviser.   Full Article 

Bold Steps

Bold Steps

SpiceJet rescue plan marks bold bet on Indian aviation recovery.   Full Article 

New Airline

New Airline

Tata, Singapore Air venture Vistara to take off on Jan 9.  Full Article 

Online Sales

Online Sales

Knock knock. Who's there? Amazon's best-selling holiday author.  Full Article 

Hacking Attack

Hacking Attack

N.Korea says did not hack Sony, wants joint probe with U.S.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage