NEW DELHI: the government intends to partially compensate state-owned oil marketing companies (OMCs) including Indian Oil Corporation, Hindustan Petroleum Corporation, and Bharat Petroleum Corporation by paying them USD 2.5 billion to cover their significant quarterly losses.
The oil marketing entities had suffered losses as a result of absorbing fluctuations in global petroleum prices, but the report, citing unnamed sources, claimed that while the Petroleum Ministry had requested a much higher sum, the Finance Ministry had only consented to a cash payout of USD 2.5 billion.
According to the Bloomberg report, the partial payout to Oil Marketing companies has also been designed to control cooking gas prices. It went on to say, citing sources, that although a decision has not yet been made, conversations about compensation payout are already advanced.
Despite the government's attempts to lessen their financial hardship, the Bloomberg report claimed that these initiatives will increase pressure on the exchequer, which is already under pressure from excise duty reductions on fuel prices and a greater fertiliser subsidy, to combat inflation.
The OMCs benchmark the fuels they produce to market prices and consume more than 85 percent of imported oil. According to the report, those increased after a worldwide demand rebound coincided with decreased US fuel production capacity and fewer Russian exports, which resulted in their losses.
India imports about half of its LPGs, generally used as cooking fuel. The price of Saudi contract price, the import benchmark for liquefied petroleum gas in India, has risen 303 percent in the past two years, while the retail price in Delhi was scaled up by 28 percent, India’s Oil Minister Hardeep Singh Puri said on September 9.
Crude Oil prices at 7-month low, No change in petrol, diesel prices in India
'Oil imports from Russia increased,' Sitharaman said- This is all due to PM...
Rupee up 27-ps to 79.68 against USD in early trade