"We have asked 57.1 per cent oil bonds. And they (the Finance ministry) are not ready for it. So we have requested the Finance Minister (P Chidambaram) to issue as much as possible," Petroleum Minister Murli Deora said after meeting the Finance Minister.
When asked about the deliberations at the meeting, Chidambaram declined to make any comment on the issue.
To a question on increasing domestic fuel prices, Deora said there was no discussion on it and that it was a policy decision that could be decided only by the Cabinet.
Petroleum Additional Secretary S Sundaresan said, "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".
According to Petroleum Ministry, oil marketing companies suffered under-recoveries of Rs 77,000 crore in 2007-08.
The Petroleum Additional Secretary said it was not discussed in the meeting whether the bonds would be taken as mandatory requirement for banks to park their funds in government securities, known as Statutory Liquidity Ratio.
When asked, Deora said there was no programme to meet Prime Minister Manmohan Singh on the oil bond issue. Meanwhile, sources said the Finance ministry has not agreed to "calculation of under-recoveries" made by the Petroleum ministry and has asked it to rework the losses.
As per the present policy, the government gives bonds for 42.7 per cent of the total under realisation on fuel sale and another 33 per cent comes from ONGC, GAIL and OIL.
To compensate the oil companies, the government issued oil bonds of Rs 20,333 crore for April-December 2007 period, 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.
The Petroleum Ministry has asked the Finance Ministry to issue additional oil bonds of about Rs 23,500 crore to offset the losses incurred by the oil marketing companies last fiscal.
According to the Petroleum Ministry, for April-December 2007 period, the three public sector oil companies lost Rs 47,619 crore. With the global crude oil price crossing 125 dollars a barrel, the oil marketing companies are expected to incur an under-recovery of Rs 1,80,000 crore in 2008-09. In March this year, the Indian basket of crude oil averaged 99.76 dollars per barrel and 96.73 dollars a barrel in 2007-08.
For the last quarter January-March, the revenue loss was estimated at Rs 29,685.5 crore, of which ONGC, GAIL and OIL were expected to contribute Rs 9,796.2 crore. This would leave a gap of Rs 7,213.6 crore for IOC, BPCL and HPCL.
According to oil companies, IOC, BPCL and HPCL lose Rs 10.78 a litre on petrol, Rs 17.02 on diesel, Rs 316.06 per LPG cylinder and Rs 25.23 a litre on kerosene. "Of the Rs 45.52 a litre price of petrol in Delhi, only Rs 22.02 per litre goes to oil companies and the rest is all duties. Similarly, taxes and duties make 32 per cent of the diesel selling price of Rs 31.76 per litre," said an official.
