State oil cos to get $4.5 bn extra cash subsidy: Srcs

The finance ministry will pay an additional USD 4.48 billion to compensate state refiners for selling fuel at subsidised rates in the fiscal year that ended March 31, a source at one of the firms said on Thursday.

The assistance is intended to partly offset retailers' losses on sales of diesel, cooking gas and kerosene at rates set by the government, which is keen to cushion voters from high international prices.

"We have been informed that a letter on this from the finance ministry has reached the petroleum ministry. Accordingly, we will factor it in our accounts for the March quarter," the source, who does not wish to be identified, told Reuters.

The source said Hindustan Petroleum's and Bharat Petroleum's share in the compensation would be about 22% each, while Indian Oil Corp would get the remaining.

The subsidy will be released after parliamentary approval. Earlier the government had issued Rs 210 billion cash subsidy for the three state refiners for the nine months ending December.

India deregulated petrol in June 2010. In addition to the cash subsidy from the finance ministry, refiners also get discounts on purchase of crude and products from state-run exploration companies.