The Finance Ministry will pay state-owned fuel retailers ₹1,300 crore cash subsidy for kerosene for the first quarter ended June 30, but the same on LPG will be decided later.
The Ministry has sanctioned a total of ₹1,300.42 crore kerosene subsidy for April-June, a senior official said here.
Of this, ₹878.84 crore will be paid to Indian Oil Corporation (IOC), ₹203.33 crore to Bharat Petroleum Corporation (BPCL) and ₹218.25 crore to Hindustan Petroleum Corporation (HPCL).
The subsidy payout is as per a new formula approved by the government wherein the dole on kerosene has been capped at ₹12 per litre.
Kerosene through public distribution system (PDS) is sold at ₹14.96 per litre against the actual cost of ₹33.47. The difference between the two, ₹14.95 per litre, is termed as under-recovery or revenue loss.
“The Finance Ministry will pay ₹12 per litre in cash to state-owned fuel retailers from the Budget and any unbridged gap between the retail selling price and the cost of production will be borne by upstream companies like ONGC,” he said.
At current prices, the upstream companies will have to bear ₹5,000-6,000 crore for the full year.
For domestic cooking gas LPG, the government has decided to fully bear the under-recovery, he said, adding that the subsidy on this fuel will be announced later.