Today, less than six weeks into the 2011-12 financial year, the government used up its entire budgetary provision of Rs 20,000 crore (Rs 200 billion) for petroleum subsidy.
It approved an additional cash subsidy of Rs 20,000 crore (Rs 200 billion) to oil marketing companies for the losses they'd made in 2010-11, due to retailing petro products at government-capped prices.
This will enable these companies, all government-owned (Indian Oil, Hindustan Petroleum and Bharat Petroleum) to declare a profit for the quarter ended March 31.
During the first three quarters of 2010-11, the government had released Rs 21,000 crore (Rs 210 billion) to the OMCs for subsidised sale of diesel, kerosene and domestic LPG.
The additional amount of Rs 20,000 crore (Rs 200 billion) would be registered in the government's accounts for 2011-12, leaving nothing for the burgeoning losses of the current financial year.
Of the Rs 20,000 crore (Rs 200 billion) granted on Thursday, Rs 11,027 crore (Rs 110.27 billion) has been allocated to IOC, Rs 4,595 crore (Rs 45.95 billion) to BPC and Rs 4,379 crore (Rs 43.79 billion) to HPC.
The cumulative Rs 41,000-crore (Rs 410-billion) cash subsidy is a little more than half of the Rs 78,000 crore (Rs 780 billion) the three companies lost on selling auto and cooking fuel in 2010-11.
While upstream firms Oil and Natural Gas Corporation and Oil India will contribute about Rs 25,750 crore (Rs 257.5 billion), the oil marketers will have to take a hit of about Rs 11,000 crore (Rs 110 billion).
Currently, the OMCs lose Rs 18.19 on every litre of diesel sold, Rs 29.69 on every litre of kerosene and Rs 330 for every LPG cylinder. The diesel price has not been raised since June 26 last year.
At these rates, the OMCs could end 2011-12 with an all-time high loss of Rs 180,000 crore (Rs 1,800 billion).
