The Finance Ministry has issued cash subsidy of Rs 7,000 crore for the first quarter of the current fiscal to the public sector oil marketing companies.
The three oil marketing companies — Indian Oil Corporation, Hindustan Petroleum Corporation, and Bharat Petroleum Corporation — are compensated for selling diesel and cooking fuel at Government-controlled prices.
Official sources said that Indian Oil will get nearly Rs 3,500 crore, while HPCL and BPCL are expected to get Rs 1,750 crore each.
Sources have confirmed that an additional Rs 7,000 crore will be released next month but that will be accounted only for the second quarter of this fiscal.
This cash subsidy will help oil marketing companies to improve their profit and loss account for first quarter of fiscal 2011-12.
The public sector retailers are expected to announce their quarterly results at the end of this month.
These three companies are incurring a daily loss of nearly Rs 300 crore.
Oil companies say that they lose Rs 5.39 on every litre of diesel and Rs 24.96 on a litre of kerosene. For every cylinder of LPG, the under-recovery is Rs 291.83.