Lower oil prices and gradual deregulation are starting to ease the stifling subsidy contribution that hampers India’s state-controlled upstream firms. ONGC and Oil India face the prospect of not having to bear a fuel subsidy burden for the fiscal year ending 31 March 2016, a move that would boost their valuations and help the government with planned share sales. The companies together shoulder more than 40pc of the government’s spending on oil subsidies. But Delhi has exempted them from paying their share of the oil products subsidy for the January-March quarter of 2014-15, which will allow the companies to report better results and higher cash flows.
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