The government has earmarked Rs 8,400 crore for compensating three Oil public sector units (PSU) — Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd — to compensate for the loss from subsidies they incurred in the quarter ended March 31.
In the January to March period, the three state-owned fuel retailers paid around Rs 5,740 crore to consumers as subsidy under the direct benefit transfer scheme for LPG — Pratyaksh Hastantrit Labh (PaHaL) — while around Rs 1,900 crore was paid under the Pradhan Mantri Ujjwala Yojana.
Generally, according to prevailing practice, oil companies sell the fuel and LPG on a subsidised rate, for which they are then compensated by the government. “According to official estimates, Rs 8,400 crore has been earmarked to pay the three oil PSUs for the January-March period and final approval will come soon,” an official with finance ministry told this publication.
Of the total bill, Rs 7,640 crore was the amount pegged as compensation for the cash subsidy on domestic liquefied petroleum gas cylinders and Rs 730 crore is for the sale of subsidised kerosene.
