Union petroleum ministry directed state-owned Indian Oil Corp (IOC) to restore supply of kerosene and LPG to Bhutan at a subsidised price from August 1.

It may be recalled that since July 1, IOC stopped selling the two fuels at concessional rates to the neighbouring country after it was told that the Ministry of External Affairs (MEA) may not pay the subsidy amount.

IOC is the sole supplier of LPG and kerosene to Bhutan. India sells LPG, kerosene and diesel to Bhutan at subsidised rates. While the difference between the selling price and actual cost on diesel is made good from the Budget, the subsidy on LPG and kerosene is paid by MEA.

It is learnt that MEA held consultations with Royal Government of Bhutan on this issue recently and following this, India decided to restore concessional supply of kerosene and LPG by IOC to Bhutan.

While supply of subsidised LPG and kerosene to Bhutan had stopped from July 1, sale of diesel at concessional rates had continued as before.

Since January, IOC has not been paid LPG and kerosene subsidy, reports indicate. Normally, subsidy is released at the end of the quarter and about Rs 30 crore towards LPG and kerosene subsidy for January-March quarter had not been paid. A similar amount would be due for the subsequent quarter.