FM seeks Rs 11,257 cr for oil bonds

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New Delhi, Nov 20: Finance Minister P Chidambaram today sought from the Lok Sabha an amount of Rs 11,256.92 crore for issuing oil bonds to state-run oil companies to compensate them partially for selling fuel at below cost.

The monies were sought in supplementary demands for grants for 2007-08, which could not be passed as the House as it was adjourned due to pandemonium by the BJP-led Opposition demanding a discussion on the sensitive issue of Nandigram violence, which left many killed.

The funds have been sought for providing compensation through issue of special securities to the oil marketing companies towards estimated under-recoveries on account of sale of sensitive petroleum products.

A joint exercise by Petroleum and Finance Ministeries had been undertaken to assess the revenue loss of oil companies on selling petrol, diesel, domestic LPG and kerosene.

The government has not allowed Indian Oil, Bharat Petroleum and Hindustan Petroleum to raise fuel prices in line with cost and instead has decided to compensate them partially through oil bonds.

Expectations are that Rs 24,000 crore worth of oil bonds this fiscal will be issued. The hike in international crude oil prices, which touched a record of more than 95 dollars a barrel has been a matter of grave concern for the government.

India imports 73 per cent of its crude oil needs to meet the fuel requirements.

Currently, petrol is being sold at a loss of nearly Rs 2.79 per litre while diesel is priced Rs 4.65 a litre below the cost.

Oil firms suffer a loss of Rs 15.50 on sale of every litre of kerosene and Rs 178.15 on sale of every LPG cylinder.

Indian Oil, Bharat Petroleum and Hindustan Petroleum are together estimated to incur a loss Rs 52,452 crore in revenues this financial year if fuel prices are not raised in line with cost.


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