(a) whether the Public Sector Oil Marketing Companies (OMCs) are in financial crisis due to huge under-recoveries in pricing of petroleum products;
(b) if so, the details thereof along with quantum of profit earned/loss incurred by OMCs during each of the last three years and the current year; and
(c) the measures taken by the Government to strengthen the financial position of OMCs without affecting the common man?
MINISTER OF STATE (I/C) IN THE MINISTRY OF PETROLEUM AND NATURAL GAS (SHRI DHARMENDRA PRADHAN)
(a) & (b): In order to insulate the common man from the impact of rise in international oil prices and the domestic inflationary conditions, the Government has been modulating the Retail Selling Price (RSP) of sensitive petroleum products viz. Diesel (in retail), PDS Kerosene and Subsidized Domestic LPG, resulting in incidence of under-recovery to the Public Sector Oil Marketing Companies (OMCs). The Government has evolved a Burden Sharing Mechanism to ensure that the burden of under-recoveries incurred by OMCs is shared by all the stakeholders in the following manner:
(i) Government through budgetary assistance;
(ii) Public Sector Upstream Oil Companies namely, Oil and Natural Gas Corporation (ONGC), Oil India Limited (OIL) and GAIL (India) Limited (GAIL) by way of price discount on Crude oil and products.
(iii) Public Sector Oil Marketing Companies, by absorbing a part of the under-recoveries.
(iv) Consumers, by minimal price increase
The net profit reported by the OMCs during last 3 years is given below:
(Rs.crore) 2011-12 2012-13 2013-14 IOC 3,954 5,005 7,019 HPC 911 905 1,734 BPC 1,311 2,643 4,061The OMCs could report profits only as a result of getting significant compensation of under-recoveries from the Government and the public sector upstream oil companies.