News  NEWS

Hike of 60 per cent in LPG scheme target fuels investor fears

172 times viewed
Source: The Economic Times
Friday, February 02, 2018

 NEW DELHI: The proposal to expand free cooking gas programme to include 8 crore poor families, up 60% from 5 crore planned earlier, will give more women freedom from hazardous kitchen smoke, but the likely increase in the subsidy has raised concerns that oil companies may have to foot the bill. 


Shares of state oil firms fell following the announcement in the Budget. The Ujjwala Yojana, conceived two years ago, has ensured record penetration of cleaner cooking gas among poor families, and is widely believed to have paid electoral dividends to the BJP in assembly polls, triggering demand from the oil ministry to expand its scale. 

"Encouraged by the huge success of Pradhan Mantri Ujjwala Yojana (PMUY) in improving 'Ease of Living' of poor families, especially in rural India, the target of PMUY has been revised to 8 crore. Would like to assure the nation that we will achieve this target well within the deadline," oil minister Dharmendra Pradhan tweeted. So far 3.35 crore poor families have been enrolled under the scheme, which now has a target of 8 crore subscribers by March 2020. 


Expanding consumer base for subsidised cooking gas, along with sharply rising oil prices, can significantly expand the government's fuel subsidy burden. However, the government has provided a subsidy of Rs 24,933 crore for 2018-19, slightly higher than Rs 24,460 crore in the current financial year. 
 
"A fear that oil companies may end up sharing fuel subsidy next fiscal year, if oil prices were to stay high, led to the decline in oil stocks," said Ritesh Gupta, analyst at Ambit Capital. 

On Thursday, ONGC ended 4% lower while Indian Oil Corporation, HPCL and BPCL shed up to 1%. The subsidy bill would depend on the exchange rate and global oil prices, he said.
 
"The subsidy may fall short by about Rs 11,000 crore if crude oil prices and rupee/dollar parity were to stay at $70 per barrel and 65, respectively, for 2018-19 and the current under-recovery sharing mechanism continues," said K Ravichandran, analyst at credit rating agency ICRA. "Having said that, the amount is manageable and will not materially impact liquidity and profitability of oil marketing companies and the upstream companies," he said. 


Comments:



Post Your Comment:

Name:*
    
E-mail:*
    
Comments:*
    


Also Read:

»

Breather for solar gear importers

»

State Oil cos plan capex of Rs 89k crore, 50% for E&P

»

Hike of 60 per cent in LPG scheme target fuels investor fears

»

Budget 2018: Positive impact on power sector, Saubhagya to boost demand

»

Budget proposes less tax on income from carbon credits

»

Petrol, diesel prices continue to spiral

»

Government to consolidate large subsidiaries into one

»

Oil & gas industry seeks infra status, lower taxes in budget

»

How a 150ft tunnel was used to pilfer oil from IOC pipeline

»

PNGRB revising city gas licensing rules: Chairman Dinesh Sarraf

News  NEWS ARCHIVE
   
Home | Recent News | Privacy Policy | Disclaimer | Feedback | Sitemap | Contact Us

© Copyright Power Hub 2012-2014, All rights reserved.