Petro Min seeks Rs 20,872-cr oil bonds

Petroleum ministry has sought oil bonds worth Rs 20,872 crore (Rs 208.72 billion) to compensate state-owned fuel retailers for the losses incurred on selling domestic LPG and kerosene below cost this fiscal.

Minister of state for petroleum and natural gas Jitin Prasada in a written reply to a question in the Lok Sabha said the finance ministry is yet to approve the oil bonds. Indian Oil, Bharat Petroleum and Hindustan Petroleum lost Rs 11,853 crore (Rs 118.53 billion) in revenues on not being allowed to raise LPG and kerosene prices in line with the cost during April- September.

An additional Rs 9,019 crore (Rs 90.19 billion) revenue loss is estimated for third quarter ending December 31, 2009.

"Petroleum ministry has made a request to the ministry of finance for sanction of oil bonds of these amount," he said.

The government had this year decided to make good all of the revenue lost on sale of domestic LPG and kerosene through issue of oil bonds, while the same on petrol and diesel was to be met by upstream firms like OIL and Natural Gas Corporation.

"Finance ministry has informed that the compensation to oil companies has not been covered in the First Supplementary Demands for Grants (or additional spending) which has been presented in Parliament on December 8," he said.

The three firms lose Rs 3.10 a litre on petrol, Rs 2.55 per litre on diesel, Rs 17.30 a litre on kerosene and Rs 241.03 per LPG cylinder, he said. They are projected to lose about Rs 45,800 crore (Rs 458 billion) in revenues in full year.

Prasada said under-recoveries or revenue loss on petrol and diesel amounting to Rs 4,003 crore (Rs 40.03 billion) had been compensated by ONGC, Oil India Ltd and GAIL India Ltd through price discounts on crude oil and products sold to retailers.

The government, which had last fiscal issued oil bonds worth Rs 71,292 crore (Rs 712.92 billion), has not issued any bonds to the three PSUs for revenue losses during the current fiscal.

Non-issuance of oil bonds had led to HPCL and BPCL reporting net losses in the July-September quarter.

HPCL reported a net loss of Rs 136.68 crore (Rs 1.36 billion) in the second quarter, while BPCL posted a net loss of Rs 158.77 crore (Rs 1.58 billion).

IOC was slightly better off, registering a net profit of Rs 284.36 crore (Rs 2.84 billion).