(a) whether profit of oil companies is increased exorbitantly due to subsidy being given to
them;
(b) if so, the reaction of the Government thereto; and
(c) the present mechanism adopted by the Government to provide subsidy to oil companies in
the country?
MINISTER OF STATE IN THE MINISTRY OF PETROLEUM AND NATURAL GAS(SHRI JITIN PRASADA)
(a)to(c): The Public Sector Oil Marketing Companies (OMCs) namely, Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPC) and Hindustan Petroleum Corporation (HPC) have been
incurring under-recoveries on the sale of sensitive petroleum products i.e. Petrol, Diesel,
Domestic LPG and PDS Kerosene. To compensate the under-recoveries incurred by the OMCs, the
Government has been following a Burden Sharing Mechanism to ensure that the under-recoveries
are equitably shared by all the stakeholders; viz, the Government, the Public Sector Oil
Companies and the consumers in the following manner:
# Government through issue of Oil Bonds/Cash Subsidy;
# Public Sector upstream oil companies through price discounts to OMCs;
# OMCs to bear a portion of the under- recoveries; and
# Consumers to bear minimal price increases.
The details of the under-recoveries incurred by OMCs and compensation provided to the OMCs
under the burden sharing mechanism by the Government & Public Sector upstream oil companies
during the last three years and the current year are as below:
(Rs./crore)
Particulars 2007-08 2008-09 2009-10 2010-11 (April -June)
Total Under recovery 77123 103292 46051 20072
Compensation through:
- Oil Bonds/Cash Assistance 35290 71292 26000# 0 by Government
- Upstream assistance 25708 32000 14430 6691
Total Assistance 60998 103292 40430 6691
Under-recovery borne by 16125 0 5621 13381 OMCs
(Rs./crore) OMCs 2007-08 2008-09 2009-10 2010-11 (April- June)
IOC 6963 2950 10221 (3388)
BPC 1581 736 1538 (1718)
HPC 1135 575 1301 (1884)
Total 9679 4261 13060 (6990)