India's state refiners could get Rs140b compensation

New Delhi: India's government sought parliamentary approval to give state refiners Rs140 billion (Dh11 billion) as compensation for selling fuels below cost.

The amount will be given in cash to the refiners, the finance ministry said in a note presented in parliament in New Delhi yesterday, seeking consent for additional spending by the federal government.

State refiners got Rs120 billion in cash to cover revenue losses for the nine months ended December 31 and the government agreed to give an additional Rs140 billion for the year ended March 31, Oil Minister Murli Deora said on May 5.

Indian Oil Corporation and state-owned rivals posted losses in the first quarter of the current financial year after failing to get compensation for selling fuels below cost to help curb inflation in Asia's third-biggest energy consumer. Their profitability may improve after the government freed gasoline prices from state control in June and increased rates of diesel, cooking gas and kerosene.

Indian Oil, Bharat Petroleum Corporation and Hindustan Petroleum Corporation reported a combined loss of Rs69.9 billion in the three months ended June 30, according to Bloomberg calculations from reported figures.

Indian Oil rose 1.1 per cent to Rs362 at 2.05pm in Mumbai trading compared with a 0.2 per cent increase in the benchmark Sensitive Index. Bharat Petroleum climbed 1.6 per cent and Hindustan Petroleum gained 1.4 per cent.

State refiners depend on government compensation to help report profits and generate money to build refineries and pipelines.