Rs 60K cr upstream subsidy burden expected: Quant Broking

The oil ministry has said that upstream companies will be contributing Rs 60,000 crore to oil marketing companies.

Gagan Dixit of Quant Broking says that the Rs 60,000 crore upstream subsidy burden was mostly in line with expectations. Talking to CNBC-TV18, he says there should not be any surprise, because these companies are already paying USD 150 billion on a quarterly basis.

Subsequently, on a full-year basis, we are getting a USD 600 billion number. So, this is more or less in line with what the Oil and Natural Gas Corporation (ONGC) management has been communicating since the past one year. However, crude prices have corrected, and the diesel under-recoveries have also come down, below Rs 4.

It has to be seen how much these upstream companies will benefit from the decline in any subsidy. That will need to be watched.