New Delhi: For one, it seems that the fuel price hike will have no impact on the oil marketing companies and the duty rejig is likely to further hurt refineries like the IOC.
The recent hike in Central excise and restoration of Customs duty that led to an immediate increase in retail fuel prices has been opposed by the BJP and Left Parties. Even UPA allies like the Trinamool Congress and the DMK want the decision to be rolled back.
The increase in duties on petrol and diesel provides no relief whatsoever to the bleeding oil marketing Cos.
While the exchequer is looking to mop up over Rs 10,000 crore from the duty rejig, the oil marketing Cos will still report under-recoveries of around Rs 40,000 cr this fiscal.
"As far as petrol and diesel is concerned, the existing under-recoveries continue. Whatever has happened in the Budget has been passed through," said Narasimhan, Director of Finance in the Indian Oil Corporation.
Meanwhile the OMCs, as well as upstream firms like ONGC remain confused on the subsidy sharing mechanism for this fiscal.
As of now, against the Rs 21,000 cr of under recoveries reported on kerosene and LPG in the first three quarters this fiscal, the finance minister has budgeted a compensation of only Rs 12,000 cr in cash for the entire financial year. It is still not known how this shortfall will be made up.
The upstream oil Cos have so far this fiscal taken on the entire Rs 8,000 cr subsidy burden on account of petrol and diesel and hope they will not be asked to make up for the Rs 9,000 crore shortfall in the case of cooking fuels.
Needless to say they are disappointed that these issues were not taken up in the budget.
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