The finance ministry has turned down the petroleum ministry's demand to issue oil bonds worth Rs44,000 crore to partially offset the Rs77,000 crore losses suffered by oil marketing companies during 2007-08.

According to the petroleum ministry estimates, for April-December 2007 period, the three public sector oil companies together lost Rs47,619 crore. The ministry has asked the finance ministry to issue additional oil bonds of about Rs23,500 crore to partially offset the losses.

"We have asked 57.1 per cent oil bonds. And they are not ready for it. So we requested the finance minister to issue as much as possible,'' petroleum minister Murli Deora said after meeting the finance minister.

Deora said it was a policy decision and could be decided only by the cabinet.

"We had a very satisfactory discussion. The petroleum minister has explained the problems faced by the oil marketing companies and we will take a decision very soon on the quantum of oil bonds, " said a petroleum ministry official.

Sources, meanwhile, said the finance ministry has not agreed to "calculation of under-recoveries" made by the petroleum ministry and has sought a rework of the losses.

The government usually issues oil bonds for 42.7 per cent of the total under-recoveries on fuel sales while 33 per cent comes from ONGC, GAIL and OIL.     

The government issued oil bonds of Rs20,333 crore for April-December 2007 period, while upstream companies like ONGC, OIL and GAIL chipped in Rs15,873 crore.

The remaining Rs11,413 crore was borne by IOC, BPCL and HPCL.     

With the global crude oil price crossing $125 a barrel, public sector oil marketing companies are expected to incur an under-recovery of Rs1,80,000 crore in 2008-09.