The under-recovery by the public sector Oil Marketing Companies (OMCs) on the sale of subsidized diesel, LPG and kerosene is Rs 51,110 crore in Q1 & Q2 of the current financial year. In the next two quarters, this is estimated to be Rs 26,491 crore (total for year 2014-15 is Rs 77,601 cr) due to fall in crude price.
This burden is shared amongst oils sector PSUs and the central government, and the sharing-formula is derived every year, and some unmet demand is carried forward. For example, in the previous financial year 2013-14, the unmet under-recovery was Rs 35,000 crore which was carried forward to the current year.
The oil ministry has now moved a proposal under which the upstream companies do not have to share the burden if the price of crude is $60/bbl, and 85 per cent will be shared if price is between $60-100/bbl, and 90 per cent share if price is above $100/bbl.
