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Subsidy Structure in Petroleum Sector |
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1 |
Government vide Gazette notification no.
P-20029/22/2001-PP dated 30/3/2002 decided to fully dismantle the Administered
System of Pricing Mechanism (APM) in the petroleum sector w.e.f. 1/4/2002. |
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2 |
Post-APM, MoP&NG has approved the
following subsidy schemes which are met from the budgetary grants of
MoP&NG: |
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a) |
PDS Kerosene and Domestic LPG Subsidy Scheme,
2002 with effect from 01/04/2002 vide Gazette Notification ref P-
20029/18/2001-PP dated 28/01/2003 for administering the post APM subsidy on
PDS Kerosene and Domestic LPG. |
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b) |
Freight Subsidy (For Far-Flung Areas)
Scheme, 2002 with effect from 01/04/2002 vide Gazette Notification ref P-
20029/18/2001-PP dated 28/01/2003 for administering the post APM freight
subsidy on PDS Kerosene and Domestic LPG for far-flung areas. |
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c) |
The
Irrecoverable Taxes Compensation Scheme, 2002 with effect from 01/04/02 vide
Gazette Notification ref P- 20029/18/2001-PP dated 16/01/2003. This scheme
was applicable for financial year 2002-03 only. |
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d) |
ATF Sales Tax
Compensation Scheme, 2002 vide Gazette Notification ref P- 20029/18/2001-PP dated
31/03/2003. This scheme was applicable from 1/4/2002 to 22/11/2002. |
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PDS Kerosene and Domestic LPG Subsidy
Scheme, 2002 |
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i) |
The subsidy under PDS Kerosene and Domestic LPG Subsidy Scheme, 2002 is
provided on the sales made by the participating companies (IOC, HPC, BPC
& IBP) of Kerosene under Public Distribution System and LPG cylinders for
domestic use. The quantity of PDS Kerosene on which subsidy is allowed for
each state is limited to the allocations made by MoP&NG subject to actual
quantities sold. |
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ii) |
The amount of subsidy per selling unit as on 1/4/2002 was the
difference between the cost price and the issue price per selling unit and
was computed ex-depot for PDS Kerosene and ex-bottling plant for Domestic
LPG. It was decided that the subsidy per selling unit for any depot/ bottling
plant effective 1/4/2002 shall be frozen and remain unchanged for the
financial year 2002-03. The subsidy admissible under this Scheme for 2003-04
was at 2/3rd level of the rates allowed during 2002-03 and the
subsidy admissible for 2004-05, 2005-06 and 2006-07 is at one-third (1/3rd)
level of the rates of subsidy for 2002-03. MoP&NG vide its letter No. P-20012/6/2007-PP dated 22/10/07 had advised that the final rate of subsidy admissible under “PDS Kerosene and Domestic LPG Subsidy Scheme 2002” for 2007-08 to 2009-10 would be at one-third (1/3rd) level of the rate of subsidy for 2002-03. |
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Freight Subsidy (For Far-Flung Areas)
Scheme, 2002 |
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i) |
Currently, IOC, HPC, BPC & IBP are allowed to participate in this
scheme. The freight subsidy on supplies/sales of PDS Kerosene and domestic
LPG in the far-flung areas covers a part of the freight cost in the eligible
areas up to the wholesale dealer location in the case of PDS Kerosene and up
to the LPG distributor location, including the extension counters, in the
case of domestic LPG. |
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ii) |
The entitlement of subsidy under the Freight Subsidy (For Far-Flung
Areas) Scheme, 2002 scheme from 1/4/2002 is limited to the freight subsidy
available in the eligible areas as on 31st March, 2002. It was decided that
the freight subsidy effective 1/4/2002 shall be frozen and remain unchanged
for the financial year 2002-03. The subsidy admissible under this Scheme for
2003-04 was at 2/3rd level of the rates allowed during 2002-03 and
the subsidy admissible for 2004-05, 2005-06 and 2006-07 is at one-third (1/3rd)
level of the rates of subsidy for 2002-03. MoP&NG vide its letter No. P-20012/6/2007-PP dated 22/10/07 had advised that the final rate of subsidy admissible under “PDS Kerosene and Domestic LPG Subsidy Scheme 2002” for 2007-08 to 2009-10 would be at one-third (1/3rd) level of the rate of subsidy for 2002-03. |
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The
Irrecoverable Taxes Compensation Scheme, 2002 |
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Under this scheme, the oil companies were compensated for
irrecoverable state taxes to facilitate smooth transition from administered
pricing regime to the market determined pricing regime. This scheme was
applicable for financial year 2002-03 only. |
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ATF Sales Tax
Compensation Scheme, 2002 |
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Under this scheme, oil companies were compensated in lieu of the
sales tax under recoveries on account of ATF sales to foreign airlines. This
scheme was applicable from 1/4/2002 to 22/11/2002 only. Full details of the above schemes are in Notifications
section. |