The Minister of State for Petroleum & Natural Gas, Mr R.P.N Singh, said it was difficult to evolve a fixed policy to fund under-recovery, as it varied from quarter-to-quarter even in a particular year.
He gave this information in the Lok Sabha on Thursday, in reply to a question on compensation to public sector oil marketing companies (OMCs).
The OMCs incur under-recoveries for selling petroleum products below the market price.
Too many factors
Compensation of under-recoveries depends on various factors, including price of commodities in the international as well as domestic markets, changes in consumption volumes and ability of oil companies to share it, he said, adding: “Hence, it is not possible to estimate the under-recovery for future.”
Mr Singh said the Government had evolved a burden-sharing mechanism since 2003-04 to ensure that under-recoveries incurred by OMCs were shared by all stakeholders — Government (cash assistance), upstream companies (price discount on crude oil and products), OMCs (absorbing part of the under-recoveries), and consumers (minimal price increase). To insulate the common man from the impact of the rise in international oil prices, the Government has been modulating the retail selling price of diesel, PDS kerosene, and domestic LPG, resulting in the incidence of under-recoveries by the OMCs. Petrol has been deregulated since June 2010. To another question on subsidy by upstream oil companies, he said, for the fiscal 2011-12 (up to December 2011) the public sector upstream oil companies have forked out Rs 36,894 crore as part of burden-sharing.
He said that the extent of the burden-sharing by upstream companies depends on the quantum of total under-recoveries incurred by PSU oil retailers and the burden-sharing formula formalised by the Finance Ministry in consultation with the Petroleum Ministry.