The Union Finance Ministry has released Rs 17,772 crore to subsidize state-run oil marketing companies (OMCs) to help them cover some of their losses they incurred by selling diesel, kerosene and LPG below cost in the September quarter.

On November 6, the Finance Ministry informed the Petroleum Ministry that it had released cash subsidy of Rs 8,772 crore for Indian Oil Corporation Ltd (IOCL), Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL). In a fresh communication, the ministry confirmed the release of another Rs 9,000 crore to subsidize the state-run OMCs.

The IOCL, HPCL and BPCL suffered combined losses of Rs 35,328 crore in revenues on selling the fuels at subsidized rates in the July to September quarter. In April to September period of the current year, the three state-owned retailers lost Rs 60,907 crore in revenues on the subsidized fuels.

Upstream oil & gas producers like ONGC and GAIL (India) will make up Rs 16,729.74 crore of the total losses. Cash subsidy issued by the finance ministry will cover around a quarter of the total losses.

Subsidy payments to cover losses on subsidized fuels have long been a source of clash between oil PSUs and the government. IOC and other refiners have been complaining about long delays in release of cash subsidies, which force refiners to resort to borrowing. Now, they want the government to bear the cost of interest they pay on the borrowed money.