(rpting with changes in para 1 and 2)

New Delhi, Feb 14 (UNI) The Government today hiked the retail price of Petrol by Rs two per litre and Diesel by Re one per litre to offset the losses incurred by oil marketing companies (OMCs) due to continued surge in global prices of oil, Petroleum Minister Murli Deora said.

The hike would be effective from midnight tonight.

The government had last increased petrol and diesel prices on June 6, 2006.

The OMCs will benefit Rs 840 crore from the fuel price hike, Petroleum Secretary M S Srinivasan said.

The government also hiked the share of oil bonds to 57 per cent of the total under-recoveries from 49 per cent.

The government has already issued bonds worth Rs 11,256.92 crore to the three state-owned oil marketing companies (OMCs) as compensation for under-recoveries because of rising global crude oil prices.

These bonds will have a coupon rate of 7.95 per cent and mature in 2025.

Bonds worth Rs 6,362.25 crore had been issued to the Indian Oil Corporation, while Bharat Petroleum Corporation Limited got Rs 2,539.13 crore and Hindustan Petroleum Corporation Limited, Rs 2,355.54 crore.

The three government-owned OMCs are projected to lose Rs 69,753 crore on sale of petrol, diesel, LPG and PDS kerosene as the government has not allowed them to raise prices in line with the price of imported crude.

Petrol was being sold at a loss of Rs 8.74 a litre, diesel at Rs 9.92 per litre, kerosene Rs 20.53 a litre and LPG at a loss of Rs 256.35 per cylinder.

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