Deora to demand Rs30,000 crore oil bonds at meeting with PM
13 Jan 2010
Ahead of the top-level meeting scheduled for Thursday on the vexed issue of oil subsidies at the retail level, the petroleum ministry has said that it will seek Rs30,000 in oil bonds to help public sector oil marketing companies cover their losses.
Petroleum and natural gas minister Murli Deora would push the issue at the meeting, ministry secretary R S Pandey told reporters in New Delhi ysterday. The meeting was scheduled for this evening, but has been postponed by a day.
Early in the financial year, the government had said it would issue oil bonds as it has done in the last two years; but later pulled back on the decision and decided to let the oil refiners and distributors distribute the cost of under recoveries among themselves. The oil marketing companies (OMCs) – Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd, and Hindustan Petroleum Corp Ltd – are state-owned and have no freedom on pricing of their products.
The total under-recoveries of the three OMCs from below-cost sale of liquefied petroleum gas and kerosene are in the range of Rs21,000 crore, said Pandey. ''At current estimates, this figure will go up to Rs30,000 crore by March,'' he added.
The government has not issued oil bonds in the last three years. As a result, BPCL and HPCL reported net losses in the second quarter, while IOC made a nominal profit. HPCL reported a net loss of Rs136.68 crore, while BPCL posted a net loss of Rs158 crore.
The losses made on kerosene and domestic LPG, in particular, have made them poorer by Rs 21,000 crore for the first nine months of this fiscal and with crude and product prices holding firm, the fourth quarter losses on these fuels is expected to be in the range of Rs 10,000 crore.
