Petroleum Min in talks with FinMin over oil bonds

Srinagar, Jun 18 (UNI) Petroleum and Natural Gas Minister Murli Deora today said discussions were going on with the Finance Ministry over issuing of oil bonds to tide over under-recoveries in this financial year at current prices.

''These (oil bonds) are under discussions with the Finance Ministry. We are approaching the Finance Minister on the issue,'' he told journalists here.

However, Mr Deora did not specify the quantum of bonds the Finance Ministry would issue to Indian Oil, Bharat Petroleum and Hindustan Petroleum.

''How much I can't say...But, we will try our best,'' he added.

The Petroleum Ministry has approached the Finance Ministry to issue oil bonds for the current financial year to tide over the projected under-recoveries of Rs 50,400 crore made by public sector oil marketing companies by selling motor and kitchen fuels below international price parity.

The under-recoveries -- a reference to the revenues foregone by oil marketing firms that charge consumers lower than market prices -- would have been in the vicinity of Rs 75,000 crore at current prices but for the appreciation of rupee against global currencies.

The Petroleum ministry is expected to seek oil bonds of about Rs 17,000 crore. In 2006-07, the Finance Ministry had issued oil bonds to the tune of Rs 24,151 crore.

As per burden-sharing arrangement worked out by the government in the past four years, the upstream oil companies -- Oil and Natural Gas Corporation, Oil India Limited and GAIL (India) -- share one-third of the under recoveries faced by oil marketing companies.

The government also shares part of the burden by way of compensating fuel retailers through issue of oil bonds which take one-third of the burden, while the marketing companies take the impact of the remaining on their balance sheets.

The rest splits between the retailers and the consumers.

UNI