India to pay state fuel retailers $5.5 billion oil subsidy

NEW DELHI Thu Nov 8, 2012 11:50pm IST

A vendor loads empty Liquefied Petroleum Gas (LPG) cylinders onto a truck in Mathura January 29, 2009. REUTERS/K.K. Arora/Files

A vendor loads empty Liquefied Petroleum Gas (LPG) cylinders onto a truck in Mathura January 29, 2009.

Credit: Reuters/K.K. Arora/Files

Related Topics

Stocks

   
We can be heroes

We can be heroes

Walking among us are superheroes, ready to appear anywhere they're needed, whether it's for voting, promoting or protesting.  Slideshow 

NEW DELHI (Reuters) - India will pay 300 billion rupees ($5.5 billion) to state-owned fuel retailers forced to sell at cheaper government-set rates in the first half of the year, said three sources who saw the finance ministry's confirmation letter.

The government fixes retail prices of liquefied petroleum gas, kerosene and diesel to protect the poor, leading to revenue losses at state-run Indian Oil Corp (IOC) (IOC.NS), Bharat Petroleum Corp (BPCL) (BPCL.NS) and Hindustan Petroleum Corp (HPCL) (HPCL.NS).

The payout by the finance ministry, nearly 46 percent less than the 554 billion rupees the oil ministry had been seeking, will be released after parliamentary approval is granted, the sources said.

The finance ministry pays cash subsidies to state oil retailers while state-run upstream companies - Oil and Natural Gas Corp (ONGC.NS), Oil India Ltd (OILI.NS) and GAIL (India) (GAIL.NS) - sell crude oil and associated products at a discount.

India raised the price of diesel in mid-September, after a gap of more than a year, and capped annual sales of subsidised cooking gas cylinders to six per household.

The three fuel retailers received the letter from the finance ministry on Thursday morning, the sources said.

IOC, the largest fuel retailer, will receive a government subsidy of about 161 billion rupees, while HPCL and BPCL's share will be about 66.7 billion rupees and 72 billion rupees respectively, they said. (Reporting by Nidhi Verma; Editing by David Goodman)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Markets

REUTERS SHOWCASE

Banned From Bidding

Banned From Bidding

India bans Finmeccanica from bidding for contracts amid graft case.  Full Article 

Sugar Talk

Sugar Talk

Sugar export rebound at risk from rising domestic prices.  Full Article 

GDP Preview

GDP Preview

Economy likely grew faster in June quarter: Reuters poll.  Full Article 

New Ordeal

New Ordeal

After disasters, stricken Malaysia Airlines staff brace for job cuts.  Full Article 

Deal Talk

Deal Talk

Kleiner to invest in messaging startup Snapchat at near-$10 bln valuation - report.  Full Article 

Expert Zone

Expert Zone

Column - Why inflation is so persistent.  Full Article 

Reuters India Mobile

Reuters India Mobile

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