Govt to issue Rs 9,297-cr oil bonds
New Delhi   13-Mar-2008
The government has decided to issue oil bonds worth Rs 9,297 crore to PSU oil marketing companies (OMCs), IndianOil, BPCL and HPCL, to partly compensate them for selling domestic LPG and PDS kerosene below cost during the October-December quarter. Finance minister P Chidambaram on Wednesday tabled 'Supplementary Demands for Grants' seeking approval of Parliament to issue special securities amounting to Rs 9,296.92 crore to the three PSU OMCs. The Centre had previously issued oil bonds worth Rs 11,257crore to the three OMCs for selling fuel below cost during the April-September period. Of the fresh approval, IndianOil is likely to get Rs 5,098 crore worth of oil bonds, while the remaining would be split between HPCL and BPCL. Chidambaram also sought Parliament approval for spending Rs 197.37 crore and Rs 23.14 crore for settlement of contingent liability of ONGC and IndianOil respectively. The supplementary demands included augmentation of subsidy on domestic LPG and PDS kerosene to the tune of Rs 50 crore. The government has not allowed public sector oil retailers to raise prices of petrol, diesel, domestic LPG and kerosene for PDS sale despite rise in raw material cost (crude oil), and instead compensates them for 42.7% of the revenue loss through issue of oil bonds. Upstream oil companies like ONGC, GAIL India and Oil India chip in one-third of the under-realisation by way of discounts. In April-December, they contributed Rs 15,873 crore. For the full fiscal 2007-08, revenue loss on petrol, diesel, LPG and kerosene is estimated at Rs 71,808 crore that is to be split between government (oil bonds), upstream firms and retailers.