The Oil Ministry is preparing a proposal for Cabinet approval to sharply reduce the subsidy burden of the public sector upstream oil companies in 2014-15 (Apr-Mar) and thereafter to ensure net realisation of at least $65 a barrel. The proposal will pitch for aligning the subsidy liability of ONGC and Oil India with a formula proposed by a committee headed by former Planning Commission member Kirit Parikh. The formula recommends upstream subsidy burden at 40 per cent of crude price and $0.25 per barrel for every increase of $1 in price beyond $80 a barrel.
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