Govt stirs up oil companies' Q2

Doles out Rs 11,250 cr bonds to IOC, BP HPCL.

The three government-owned oil marketing companies' second quarter profits are likely to be boosted with the government agreeing to issue them oil bonds worth Rs 11,250 crore in the first tranche before they close their books for the quarter.

"There has been a communication from the ministry of finance to the petroleum ministry for issue of oil bonds in which our share would be around Rs 6,300 crore. We expect to get the official communication from the oil ministry in a day or two, and we can record the bond value in our second quarter numbers. This will help us register profits," said a senior official with Indian Oil Corporation (IOC), the largest retailer of petroleum products.

Hindustan Petroleum Corporation (HPCL) is likely to get Rs 2,400 crore worth of bonds and Bharat Petroleum Rs 2,500 crore. 
 

PUMPING IN
Year	Under- recoveries (Rs cr)	bonds issued  (Rs cr)
2005-06	40,000	11,500
2006-07	49,000	24,121
2007-08	54,935*	23,458
*estimated

Oil bonds are issued to oil marketing companies to partly compensate them for selling petrol, diesel, LPG and kerosene at subsidised prices.

"The oil companies will be intimated of their share of oil bonds soon, hopefully before the month is over," said a senior petroleum ministry official.

The oil companies though are likely to get those bonds only in December after it is approved by Parliament under the supplementary demand for grants. The companies can however account for them in their books for the quarter ended September 30. Earlier this month, the Cabinet had approved the issue of oil bonds worth Rs 23,458 crore in the current financial year.

High crude oil prices have pushed up the daily losses of the three oil marketing companies to around Rs 220 crore a day in the first fortnight of October compared with around Rs 200 crore in the second fortnight of September.

IOC alone is losing Rs 3.90 for every litre of petrol it sells, which is up from Rs 3.50 per litre in the second half of September. Diesel sales are resulting in a loss of Rs 6.20 per litre, which is also higher than Rs 5.70 per litre in the second fortnight of September.