Deora may ask higher compensation for oil cos

Petroleum Minister Murli Deora is likely to meet Finance Minister P Chidambaram later this week to seek greater compensation for oil companies who are currently losing about Rs 450 crore a day on fuel sales.

Indian Oil, Bharat Petroleum and Hindustan Petroleum are likely to see doubling of revenue loss on sale of petrol, diesel, domestic LPG and PDS kerosene to Rs 150,000 crore this fiscal and with fuel price hike ruled out as the inflation rate was at 30-month high of 7.4%, Deora would seek higher oil bonds for the oil companies.

"Deora may meet the Finance Minister possibly on Friday or Saturday," a top Petroleum Ministry official said adding a detailed note on the revenue loss on fuel sale in 2007-08 has already been sent to the Finance Ministry for consideration.

Currently, the Finance Ministry compensates 42.7% of the total under-realization on fuel sale through issue of oil bonds. This is considered grossly inadequate by the Petroleum Ministry as is seeking 57-60% of the total revenue loss to be met through oil bonds.

The three fuel retailers together lost Rs 77,304.50 crore on fuel sale in 2007-08.

For April-December 2007 period, the three companies lost Rs 47,619 crore. Of this, the government compensated Rs 20,333 crore by way of oil bonds while upstream companies like ONGC, OIL and GAIL chipped in Rs 15,873 crore. The remaining Rs 11,413 crore was borne by IOC, BPCL and HPCL.

For the last quarter January-March, Rs 29,685.5 crore revenue loss has been estimated, of which the government may issue bonds worth Rs 12,675.7 crore (as per current dispensation) while ONGC, GAIL and OIL may chip in Rs 9,796.2 crore. This would leave a gap of Rs 7,213.6 crore for IOC, BPCL and HPCL.