New Delhi, Oct 11 (UNI) In a move to avoid any hike in prices of petrol and diesel, the Cabinet today decided to issue oil bonds worth Rs 23,458 crore to oil marketing companies (OMCs) to offset their under-recoveries of 42.7 per cent arising from rising global crude prices.
The first tranche of bonds worth Rs 12,000 crore will be issued on October 13, Petroleum Secretary M S Srinivasan said and ruled out any hike in fuel prices till March 2008.
The upstream companies have been asked to share about one-third of the total under-recoveries of the OMCs, Information and Broadcasting Minister Priya Ranjan Dasmunsi told reporters here.
The government would extend the existing subsidy for Kerosene and LPG for three more years from April 1, 2007, he said.
The decisions would enable continuation of subsidies on PDS kerosene and domestic LPG and sharing the burden of OMCs' under-recoveries on account of sale of sensitive petroleum products.
Last evening, Petroleum Minister Murli Deora ruled out any immediate hike in fuel prices saying the government is committed to protecting the interest of the common man by ensuring that the impact of surging global oil prices is shared by the domestic oil marketing companies (OMCs) whose under recoveries is expected to touch Rs 52,500 crore in 2007-08.
''The government is closely monitoring the prices of petrol, diesel, PDS kerosene and domestic LPG,'' Mr Deora said.
The under-recoveries of the three government OMCs such as Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corportaion Ltd (BPCL) -- have risen to about Rs 200 crore per day for the first half of this month from around Rs 180 crore in the previous fortnight, as the Government has not permitted them to raise prices this year even as crude oil costs surged to a record.
Talking on the global oil prices, he said it will continue to be volatile and the Indian basket of crude oil has touched a high of 77.20 dollars per barrel as on September 21.
There has been no revision in the prices of fuel in spite of consistent rise in international oil prices following softening of prices post August 2006.
The government along with oil PSUs shared most of the burden of rising oil prices during 2006-07. The government issued oil bonds worth Rs 24,121 crore to OMCs to partly compensate them for under recoveries on these products while upstream companies shared Rs 20,507 crore of the burden.
The Minister directed all three CMDs of PSU Oil Marketing Companies (OMCs)- IOC, HPCL and BPCL to ensure adequate availability of cooking fuels, specially in view of the ensuring festivals.
Mr Deora has directed Petroleum Secretary to increase vigilance to curb hoarding and diversion of these vital household fuels, specifically during this festival season.
The country's downstream majors had processed 13.09 million tonnes of crude oil in August, up 8.2 per cent from 12.10 million tonnes a year earlier, while crude oil output in August rose 6.4 per cent to 2.87 million tonnes from 2.70 million tonnes a year earlier.