The government intends to partially compensate state-owned oil marketing corporations (OMCs) including Indian Oil Corporation, Hindustan Petroleum Corporation, and Bharat Petroleum Corporation with a $2.5 billion payment, according to a Bloomberg report, in order to cover their significant quarterly losses.
The OMCs suffered losses as a result of having to absorb fluctuations in global petroleum prices, but the report, citing unnamed sources, claimed that the Finance Ministry only consented to a $2.5 billion cash settlement, despite the Petroleum Ministry having requested a much higher sum.
According to the Bloomberg report, the partial payout to OMCs has also been designed to control cooking gas prices. It went on to say, citing sources, that although a decision has not yet been made, conversations about compensation payout are already advanced.
Despite the government’s attempts to lessen their financial hardship, the Bloomberg report claimed that these initiatives will increase pressure on the exchequer, which is already under pressure from excise duty reductions on fuel prices and a greater fertiliser subsidy, to combat inflation. Over 85% of the oil used by the OMCs is imported, and they benchmark the fuels they produce to market rates.
Their losses resulted from those going up after a worldwide demand recovery combined with decreased US gasoline production capacity and fewer exports from Russia, according to the report.