Oil subsidy bill of Rs 32K crore yet to be paid to OMCs: Moily

Oil minister M Veerappa Moily has said the oil subsidy bill for the next fiscal could be understated.

Oil minister M Veerappa Moily has said the oil subsidy bill for the next fiscal could be understated. I dont want to go into numbers but we will have a bill of about Rs 32,000 crore pending from 2012-13,he said at the Express Groups Idea Exchange programme on Wednesday.

In Budget 2013-14 the finance ministry has projected a petroleum subsidy bill of Rs 65,000 crore. The number is about 33 per cent lower than the sum for 2012-13.

Moily suggested that instead of a cash inflow the public sector oil marketing companies can do with a Letter of Comfort from the finance ministry to pare their losses from selling subsidised diesel,LPG and kerosene.

The minister who met chiefs of these companies on Wednesday told them he will attempt to make the finance ministry give up the plan for a export-parity pricing for the sector.

Export parity pricing will worsen the financial condition of these firms eating into their ability to make investments.

The cut back in oil subsidy for the next fiscal is built on a shift to export parity pricing plan. In the export-parity regime,the companies would be losing the benefit of compensation of about Rs 17,600 crore a year.

The oil marketing companies are facing high interest cost on their borrowings for their day-to-day operations. In fact 75 per cent of the loans are taken to service the previous debt liability. We hope the finance ministry at least sends the comfort letter of Rs 32,000 crore to prevent oil companies from posting losses, the minister said.

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He added that the OMCs mostly have vintage refineries and they need to set up modern refineries to improve efficiency.

Moily also said: Both the shale gas policy and the revised coal-bed methane policy are ready. We will be taking the former to the Cabinet for clearance in the next 15 days and the latter,within a week.

The policy focus on energy security will also see a more aggressive,yet focussed foray of government-owned oil companies to acquire hydrocarbon assets in Africa as well as the South and North American continents.

Our oil import bill has reached a whopping 140 billion. This is not a happy situation. With these policy initiatives,we hope to reduce our import dependence by 75 per cent by 2025, Moily said.