The ministry's note to the cabinet would propose that upstream companies must be given an assured $65 a barrel on supply to oil marketing companies (OMCs). Beyond $65 and up to $100 they would have to offer an 85 percent discount per barrel price. If the price went past $100, the discount would be 90 percent on what they earned above $65.
The Parikh panel has suggested a slab-based formula for upstream share in subsidy. It had said the upstream contribution should be 40 percent if crude oil prices were below $80 a barrel and 40 percent if these were between $80-120 a barrel.
It had further suggested adding 25 basis points to the share for each $1 a barrel increase beyond $80 a barrel. If prices were above $120 a barrel, the upstream contribution was suggested at half the crude oil price
Rae also said the government is planning a partial rollback of bulk diesel pricing.
The government had in 2013 opted for a dual pricing system for bulk and retail customers. Thereafter, the sales of bulk diesel had gone down from 18 percent of the overall diesel sales to 10 percent.
All state transport utilities currently depend on retail outlets, which leaves the railways and defence as the only bulk consumers.
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