India to pay $2.25 bln oil subsidy

The finance ministry has agreed to pay 100 billion rupees ($2.25 billion) to compensate state oil retailers for selling fuel at below-market prices in the first half of the fiscal year, government sources with direct knowledge of the matter said.

The payout is less than what the oil ministry had been seeking, and officials there said on Wednesday they would ask for a higher level of cash compensation.

The payout, which will be released pending parliamentary approval, is intended to offset losses on sales of diesel, cooking gas and kerosene at government set rates during the first half of the fiscal year that started on April 1, one of the officials said.

The officials declined to be identified.

An official at a state firm said the oil ministry was seeking compensation of about 158 billion rupees for the first half, or 50 percent of gross revenue loss on fuel sales.

“Our gross revenue loss in June quarter was about 200 billion rupees and for September quarter it was about 116 billion rupees,” he said, referring to state oil retailers.