MINISTER OF STATE IN THE MINISTRY OF PETROLEUM AND NATURAL GAS (SMT. PANABAAKA LAKSHMI)
(a): The details of under-recovery incurred by the Public Sector Oil Marketing Companies (OMCs) on sale of sensitive petroleum products along with the cash assistance provided by the Government since 2010-11 is given below:
(Rs. crore) Under-recovery Cash assistance by Government
2010-11# 78190 41000
2011-12 138541 83500
2012-13 161029 100000
April-December, 2013## 100632 35772
# Price of Petrol is deregulated eff. 26.6.2010, Under-recovery on Petrol is only up to
25th Jun’10
## provisional
(b): The increase in crude oil prices and depreciation of INR/ USD exchange rate has
increased the under-recoveries of OMCs and adversely affected their cash flow position,
resulting in high borrowings. The borrowing position of the OMCs since 2010-11 is given below:
(Rs. crore) March 2011 March 2012 March 2013 December 2013
Total 96727 128272 138522 134109
(c) & (d): 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 oil bonds/cash 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 products.
(iii) Public Sector Oil Marketing Companies, by absorbing a part of the under-recoveries.
(iv) Consumers, by minimal price increase
The details of under-recovery absorbed by the OMCs since 2010-11 are given below:
(Rs. crore) OMCs
Year Amount %
2010-11 6,893 9%
2011-12 41 0.3%
2012-13 1,029 1%
April-December, 2013-14 16,889# 17%
# unmet gap, pending finalization of burden sharing of under-recovery for the year 2013-14.
(e): Government has taken various steps in the recent past to reduce the under-recovery of
the OMCs, as given below:
(i) Diesel: In order to reduce under-recovery on sale of Diesel and in pursuance of the decision taken by the Cabinet Committee on Political Affairs, the Government on 17.01.2013 authorized the OMCs to (a) increase the retail selling price of Diesel in the range of 40 paisa to 50 paisa per litre per month (excluding VAT as applicable in different State/Union Territories) until further orders; and (b) sell Diesel to all consumers taking bulk supplies directly from the installations of the OMCs at the non-subsidized market determined price.
(ii) PDS Kerosene: The quota of PDS Kerosene has been rationalized over the years resulting
in reduction in subsidy. The Government has formulated the Direct Transfer of Cash Subsidy on
Kerosene (DTCK) and 11 States/UTs have so far confirmed participation in the scheme.
(iii) Domestic LPG: Effective 14th September, 2012, the Government decided to cap the supply
of Subsidized Domestic LPG cylinders for each domestic LPG consumer to 6 cylinders (of 14.2 Kg)
per annum, which was subsequently increased to 9 cylinders on 17th January 2013. Recently, on
30th January, 2014, the cap on subsidized cylinders has been increased to 12 cylinders per
consumer per annum w.e.f. 1.4.2014 (11 cylinders for current year). Also, the Government has
launched Direct Benefit Transfer for LPG (DBTL) scheme for direct transfer of subsidy to the
customers in 291 districts of the country.
