NEW DELHI: India plans to pay around Rs 20,000 crore ($2.5 billion) to state-run fuel retailers, such as Indian Oil Corp, to offset some of their losses and check cooking gas prices, according to people familiar with the matter.
The oil ministry sought a compensation of Rs 28,000 crore, but the finance ministry only agreed to pay around Rs 20,000 in cash, the people said, asking not to be disclosed because the discussions were private. Negotiations are in the final stages but a final decision has not yet been made, residents said.
The three biggest state-owned retailers, which together supply more than 90% of India’s petroleum fuels, suffered their worst quarterly losses in years due to record international crude prices.
While the distribution may ease their pain, it will put additional pressure on government coffers already strained by fuel tax cuts and higher fertilizer subsidies to help ease their pain. inflation pressure is increasing.
The government has set aside an oil subsidy at Rs 5,800 crore for the financial year ending March, while the fertilizer subsidy is pegged at Rs 1.05 lakh.
These fuel retailers and refiners, which use more than 85% of their imported oil, have priced the fuel they produce at international prices. These numbers increased after a global recovery in demand was accompanied by a reduction in fuel production capacity in the US and fewer exports from Russia.
State-owned oil companies are obligated to buy crude at international prices and sell domestically in a price-sensitive market, while private companies like Reliance Industries have the flexibility to tap into export markets. stronger fuel exports.
India imports about half of its liquefied petroleum gas, which is commonly used as a cooking fuel. Oil and Gas Minister Hardeep Singh Puri said contract prices for Saudi Arabia, the benchmark for importing LPG into India, have increased by 303% in the past two years, while retail prices in Delhi have increased by 28%.
Representatives from the Ministry of Finance and the Ministry of Oil declined to comment.
Companies, including Bharat Petroleum Corp and Hindustan Petroleum Corp, have also slashed petrol and diesel pump prices since early April to curb rapidly rising inflation.
Bharat Petroleum President Arun Kumar Singh said last month oil companies would require some intervention through price hikes or government compensation to cover lingering losses.
The oil ministry sought a compensation of Rs 28,000 crore, but the finance ministry only agreed to pay around Rs 20,000 in cash, the people said, asking not to be disclosed because the discussions were private. Negotiations are in the final stages but a final decision has not yet been made, residents said.
The three biggest state-owned retailers, which together supply more than 90% of India’s petroleum fuels, suffered their worst quarterly losses in years due to record international crude prices.
While the distribution may ease their pain, it will put additional pressure on government coffers already strained by fuel tax cuts and higher fertilizer subsidies to help ease their pain. inflation pressure is increasing.
The government has set aside an oil subsidy at Rs 5,800 crore for the financial year ending March, while the fertilizer subsidy is pegged at Rs 1.05 lakh.
These fuel retailers and refiners, which use more than 85% of their imported oil, have priced the fuel they produce at international prices. These numbers increased after a global recovery in demand was accompanied by a reduction in fuel production capacity in the US and fewer exports from Russia.
State-owned oil companies are obligated to buy crude at international prices and sell domestically in a price-sensitive market, while private companies like Reliance Industries have the flexibility to tap into export markets. stronger fuel exports.
India imports about half of its liquefied petroleum gas, which is commonly used as a cooking fuel. Oil and Gas Minister Hardeep Singh Puri said contract prices for Saudi Arabia, the benchmark for importing LPG into India, have increased by 303% in the past two years, while retail prices in Delhi have increased by 28%.
Representatives from the Ministry of Finance and the Ministry of Oil declined to comment.
Companies, including Bharat Petroleum Corp and Hindustan Petroleum Corp, have also slashed petrol and diesel pump prices since early April to curb rapidly rising inflation.
Bharat Petroleum President Arun Kumar Singh said last month oil companies would require some intervention through price hikes or government compensation to cover lingering losses.
