New Delhi: The petroleum ministry is reworking the fuel subsidy-sharing formula through adjustment of the statutory oil cess against its share to lower the discount burden of state-run Oil and Natural Gas Corporation (ONGC) and boost the explorer`s profits.
A ministry source told IANS here Monday that according to the new subsidy-sharing formula, the outgo of upstream oil producers like ONGC is to be reduced to the extent of Rs.4,500 per tonne on oil development cess they pay to the government.
The government deregulated diesel in October, but state-run companies continue to sell it at a discount to oil marketeers for them to retail kerosene and cooking gas below cost. Upstream producers like ONGC meet almost half of the revenue loss or under-recoveries that fuel retailers incurred on selling fuel below cost.
The government plans to sell 5 percent stake in ONGC worth about $2.5 billion as part of its divestment programme.
The source said the subsidy amount for upstream companies has increased from Rs.32,000 crore in 2008-09 to Rs 67,021 crore in 2013-14.
In 2013-14, ONGC paid a record Rs.56,384 crore subsidy, which this fiscal year is likely to come down to around Rs 32,000 crore.
The Comptroller and Auditor General of India (CAG) had in a report earlier this year said the uncertainty in the mechanism of funding under-recoveries would place public sector upstream companies at a relatively disadvantageous position.
