The Petroleum Ministry is likely to seek an additional Rs 30,000 crore worth of oil bonds this fiscal to compensate public sector oil companies for losses on fuel sales.
Indian Oil, Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) are projected to lose Rs 1,14,500 crore on the sale of petrol, diesel, domestic LPG and PDS kerosene in 2008-09 fiscal, 70 per cent of which the Petroleum Ministry wants the government to compensate through issue of oil bonds.
"With fall in international crude oil prices, the ability of upstream companies like Oil and Natural Gas Corporation (ONGC) to bear part of the fuel subsidy has greatly diminished," a top ministry official said.
"In our opinion, ONGC along with GAIL and Oil India (OIL) cannot pay more than Rs 30,000 crore to subsidise fuel. The rest of the under-realisation (on fuel sales) will have to be made good by the Finance Ministry through oil bonds," he said.
The government has so far decided to issue bonds worth Rs 44,967 crore to the fuel retailers to cover for the under-realisation on fuel sales for the first half of 2008-09. For 2007-08, the government issued oil bonds worth Rs 35,289.50 crore.
ONGC, GAIL and OIL have contributed Rs 25,929 crore in April-September and if the oil ministry's proposal is accepted they may have to contribute just over Rs 4,000 crore the remainder part of the fiscal.
The official said the ministry was seeking larger quantum of oil bonds as IOC, BPCL and HPCL, who were to originally absorb Rs 22,000 crore of revenue loss on fuel sales, have reported Rs 14,431 crore of net loss in first half, thereby reducing their ability to absorb any of the losses.
