OMCs will continue to bleed as govt rules out dividend relief
Oil marketing companies (OMCs), already reeling under pressure due to absorption of Re 1 per litre cut in petrol and diesel prices, cannot expect any respite in the form of lower dividend to the government this financial year. The finance ministry on Tuesday said it does not expect a cut in dividend from oil marketing companies. Earlier, finance minister Arun Jaitley while announcing a reduction of Rs 1.50 in excise duty levied on petrol and diesel had said retailers would deduct their prices by Re 1 to ease the burden on customers. For 2018-19, Rs 52,494 crore has been budgeted as dividend from all PSUs, which is lower than the Rs 54,810 crore revised estimates of 2017-18. Economic affairs secretary Subhash Chandra Garg in a tweet on Tuesday said there is no plan for reduction in subsidy and the disinvestment target will also be met. He was reacting to reports of reduction in dividend from oil marketing companies, cut in subsidies, lesser disinvestment revenue etc.“This is completely fabricated. Nothing of this is true at all,” he tweeted. The government has set an ambitious target of Rs 80,000 crore for the current financial year. With regard to state-owned fuel retailers absorbing Re 1 reduction per litre of petrol and diesel prices, industry sources said the move would bring down their profits by Rs 9,000 crore on an annualised basis. For the remainder of the ongoing fiscal, it would be Rs 4,500 crore, with IOC’s share being roughly half and the rest is split equally between HPCL and BPCL. Jaitley had said that state-owned fuel retailers were making profits and can absorb such outgoes.