Petroleum ministry may seek Rs30,000 cr oil bonds this year

Petroleum ministry may seek Rs30,000 cr oil bonds this year

New Delhi: Petroleum ministry is likely to seek an additional Rs30,000 crore worth of oil bonds this fiscal to compensate public sector oil companies for losses on fuel sales.

Indian Oil, Bharat Petroleum and Hindustan Petroleum are projected to lose Rs1,14,500 crore on sale of petrol, diesel, domestic LPG and PDS kerosene in 2008-09 fiscal, 70% of which the petroleum ministry wants the government to compensate through issue of oil bonds.

“With fall in international crude oil prices, the ability of upstream companies like Oil and Natural Gas Corporation (ONGC) to bear part of the fuel subsidy has greatly diminished," a top ministry official said.

“In our opinion, ONGC along with GAIL and Oil India cannot pay more than Rs30,000 crore to subsidise fuel. The rest of the under-realisation (on fuel sales) will have to be made good by the finance ministry through oil bonds," he said.

The government has so far decided to issue bonds worth Rs44,967 crore to the fuel retailers to cover for the under-realisation on fuel sales for the first half of 2008-09. For 2007-08, the government issued oil bonds worth Rs35,289.50 crore.

ONGC, GAIL and OIL have contributed Rs25,929 crore in April-September and if oil ministry’s proposal is accepted they may have to contribute just over Rs4,000 crore the remainder part of the fiscal.

The official said the ministry was seeking larger quantum of oil bonds as IOC, BPCL and HPCL, who were to originally absorb Rs22,000 crore of revenue loss on fuel sales, have reported Rs14,431 crore of net loss in first half, thereby reducing their ability to absorb any of the losses.