Gas Authority of India Ltd has said that it should be exempted from payment of fuel subsidies as it does not get any upside from the rise in crude oil or natural gas price.
GAIL along with Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) have to compensate for at least one third of the revenue that fuel retailers lose on selling auto and cooking fuel at the government controlled rates.
“We have been saying that GAIL should be out of subsidy sharing mechanism as unlike oil and gas producer, we do not get any incremental revenue on the increase in oil and gas price,” the GAIL Chairman and Managing Director, Mr B.C. Tripathi, told reporters here today.
Upstream firms contributed Rs 30,297 crore or 38.75 per cent of the total revenue loss of Rs 78,189 crore in 2010-11 fiscal. GAIL’s share in this was Rs 2,111 crore or 6.97 per cent of the total upstream share.
ONGC, whose revenue increases with the rise in crude oil prices, paid Rs 24,892 crore or 82.16 per cent of the upstream contribution towards fuel subsidies.
Mr Tripathi said various government appointment committees, notably the ones headed by the Planning Commission Member, Mr B.K. Chaturvedi and Mr Kirit Parikh, too, have opined that GAIL, which essentially is a gas transmission and marketing company, should be kept out of subsidy sharing mechanism.
After the last week’s government decision to raise diesel, domestic LPG and kerosene prices together with customs and excise duty reductions to cut the revenue loss of fuel retailers, he said GAIL’s subsidy share during the current fiscal is likely to come down to 2009-10 levels.
In 2009-10, GAIL paid a subsidy of Rs 1,327 crore. This was 9.2 per cent of the total upstream contribution of Rs 14,430 crore. During the year, upstream contribution was 31.33 per cent of the total revenue loss of Rs 46,051 crore.
During the first quarter of the current fiscal, upstream firms may have to chip in Rs 14,446 crore, roughly one-third of the retailer’s revenues. Indian Oil, Bharat Petroleum and Hindustan Petroleum lost on selling diesel, domestic LPG and kerosene below cost.
Of this, ONGC may have to contribute Rs 12,123 crore, OIL Rs 1,640 crore and GAIL Rs 683 crore.
Mr Tripathi said GAIL will import at least one shipload of liquefied natural gas (LNG) every month to make up for the fall in domestic gas output. “We have already tied up import of two cargoes in July.”
Reliance Industries’ eastern offshore KG-D6 field has seen fall in output from 61.5 million standard cubic meters per day to less than 48 mmscmd. LNG costs about $12.5 per million British thermal unit, double the price of KG-D6 gas.