The Minister of Petroleum& Natural Gas Dr. M. VeerappaMoilyinformed the LokSabhain a written reply today thatout of the total projected under recovery ofRs1,63,969 crore(as per the Refinery Gate Price effective 1st March, 2013) of the Public Sector Oil Marketing Companies (OMCs) on sale of sensitive petroleum products during 2012-13, under recovery on sale of Diesel accounts for around 57%. In order to reduce under-recovery of the OMCs on sale of Diesel, the Government decided in January, 2013 to authorize the OMCs to sell Diesel to all consumers taking bulk supplies directly from the installations of the OMCs at the non-subsidized market determined price. OMCs have implemented the decision with effect from 18th January, 2013.
"The primary objective behind the pricing reforms undertaken by the Government is the growing imperative for fiscal consolidation, the need for reducing the subsidy burden on petroleum products so as to allocate more funds to social sector schemes for the common man and for ensuring country's energy security in the long term", the Minister added.
Dr Moilyalso emphasized that this Ministry has advised OMCs to take sufficient safeguards and all necessary measures to avoid diversion of subsidized Diesel from their Retail Outlets. He underlined that after considering several representations highlighting the hardships being faced by fishermen, the Government has decided with effect from 7th February, 2013 to supply Diesel to Fisherman Consumer Pumps at the price applicable for retail outlets of OMCs.
Replying to another question, the Minister informed that in order to insulate the common man from the impact of rise in oil prices in the international market and in view of the domestic inflationary conditions, Government continues to modulate the Retail Selling Price (RSP) of Diesel (partially), PDS Kerosene and Subsidized Domestic LPG, resulting in incidence of under-recoveries to the Public Sector Oil Marketing Companies (OMCs). Based on the Refinery Gate Price (RGP) effective 1.3.2013, OMCs are incurring under-recovery of Rs 11.26 per litre on sale of Diesel to retail consumers, Rs 33.43 per litre on PDS Kerosene and Rs 439.00 per 14.2 kg cylinder on Subsidized Domestic LPG. The details of the total subsidy being provided currently to the consumers on these petroleum products are given below:
Fiscal Subsidy under "PDS Kerosene and Domestic LPG Subsidy Scheme, 2002."
Under Recovery of OMCs*
Total Subsidy to Consumers
Diesel(to retail consumers)
Subsidized Domestic LPG
* Asper RGP effective 1.3.2013.
He stressed that refining of crude oil is a process industry, where crude oil constitutes around 90% of the total cost. Crude oil is processed through several processing units. Each of these units produces intermediate product streams, which require extensive reprocessing and blending. This results in difficultly in apportioning the total cost to individual refined products with reasonable accuracy. Therefore, individual product-wise costs are not identified separately.