Shares of ONGC gained 3.6 percent and Oil India rallied 7 percent intraday Wednesday on exemption of under recovery burden for fourth quarter.
Sources told CNBC-TV18 that the government has paid Rs 5,300 crore to oil companies as subsidy for the January-March quarter of financial year 2014-15.
The government exempted upstream companies from sharing Q4 under-recovery burden and will also exempt upstream oil companies from any burden sharing for LPG under direct benefit transfer for FY16, said sources.
However, CNBC-TV18 also learnt that upstream companies may have to share only kerosene under-recovery burden in FY16.
According to sources, LPG subsidy for FY16 is likely to be Rs 22,000 crore and the government does not expect too much burden on kerosene under-recovery in FY16.
At 14:56 hours IST, the scrip of Oil and Natural Gas Corporation was quoting at Rs 319.90, up Rs 8.20, or 2.63 percent and Oil India was at Rs 509.25, up Rs 30.80, or 6.44 percent on the BSE.