The Oil Ministry has pegged under-recoveries for fiscal year 2014-15 at Rs 77,000 crore, reports CNBC-TV18’s Nayantara Rai.
For the first half, upstream oil companies have paid Rs 36,000 crore while the government paid Rs 17,000 crore.
Of the remaining Rs 24,000 crore under recoveries not paid yet, the oil ministry wants the government to pick up the tab, ideally, in entirety, or at least pay Rs 20,000 crore.
The ministry believes upstream oil companies such as ONGC are in a position to, at the most, pay up only up to Rs 4,000 crore.
Under-recoveries are losses oil marketing companies make for selling fuels such as kerosene and LPG at a subsidized cost (and also on diesel till October last year after it was linked to market prices). The OMCs’ losses are later jointly reimbursed by upstream companies and the government in a subsidy-sharing formula worked out by the latter.
The total under-recovery is expected to about halve this year following the plunge in oil prices and the government’s decision to deregulate diesel pricing.
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