India will give state-run refiners including Indian Oil Corp. 250 billion rupees ($4.66 billion) as compensation for selling fuels below cost in the quarter ended Dec. 31, two finance ministry officials with direct knowledge of the matter said today.
The compensation will help bolster earnings at the refiners, the officials said, asking not to be identified because the information is still confidential. D.S. Malik, a spokesman for the finance ministry, and R.C. Joshi, a spokesman for the oil ministry, declined to comment.
State refiners sell fuels below cost to help curb inflation in Asia’s third-largest economy. The government compensates the companies for such losses, which totaled 1.24 trillion rupees, including 738.2 billion rupees on diesel, in the nine months ended Dec. 31, according to oil ministry data.
The government in January allowed refiners to fix diesel prices on their own for the first time in more than a decade, seeking to narrow its subsidy bill. The refiners sell diesel, cooking gas and kerosene at fixed prices. They are partly compensated by government cash payments and discounts on crude oil sold by state explorers including Oil & Natural Gas Corp.
ONGC is scheduled to report third-quarter earnings Feb. 11.