Home » Business » Government may issue more oil bonds
The ministry of petroleum has approached the finance ministry to seek permission to give additional bonds worth Rs 10,000 crore to the three public sector oil marketing companies --Indian Oil Corporation, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd--to help them close the last fiscal with a profit.
"We hope to receive the bonds before the financial result for the whole year is declared, so that the losses can be offset against the receipt of bonds," said oil industry officials.
The bottom lines of all three companies have been in the red for the nine months ending December 31 on account of subsidised sales of petrol, diesel, kerosene oil and liquefied petroleum gas cylinders, when prices of the Indian basket of crude touched a peak of $142 a barrel in July last year. IOC, the largest of the three, made a net loss of Rs 3,673.41 crore in the period, HPCL Rs 4,529.06 crore and BPCL Rs 2,892.12 crore, respectively.
As a result of last year's spike in oil prices, the three companies are expected to close 2008-09 with under-recoveries of Rs 103,908 crore. Losses from the sale of subsidised petroleum products are jointly shared with the upstream companies like ONGC and GAIL (through discounts) and the government (through bonds).
The government has issued bonds worth Rs 60,967 crore so far this fiscal and the upstream companies have passed on discounts of Rs 32,000 crore, according to industry officials. The government, meanwhile, raised cooking and auto fuel prices only once, in the first quarter of 2008-09.
Petroleum Secretary R S Pandey also said earlier this month that IOC, BPCL and HPCL would post a profit in the year ended March 31, 2009. The companies also received some relief from a sharp decline in crude oil prices in the last few months--the Indian basket stood at $49.72 a barrel on Friday, the latest date for which data is available.
As a result, the three companies are expected to see reasonably good profits in the quarter ended March 31, since margins remained positive for most of the quarter on both petrol and diesel.