Promit Mukherjee

Mumbai: Oil marketing companies are getting it both ways.

On the one side, they are being bled to death by the government ceiling on fuel prices in India even as crude prices have shot up to $125 levels.

On the other, the finance ministry has refused to provide any respite in the form of oilbonds.

The petroleum ministry on Monday asked the finance ministry for oilbonds worth Rs 44,000 crore, which would help the oil firms offset 57% of their losses of Rs 77,000 crore incurred in the last fiscal due to rise in crude prices.

“We have asked 57.1% oil bonds. And they (the finance ministry) are not ready for it. So we have requested him (finance minister P Chidambaram) to issue as much as possible,” petroleum minister Murli Deora told reporters after meeting the finance minister.

Under current policy, the Centre compensates 42.7% of oil marketers losses on fuel sales through bonds.

Another 33% comes from contribution by oil producers ONGC, GAIL and OIL India.

And the government did not even discuss increasing fuel prices.

“That is a policy decision and could be decided only by the Cabinet,” he pointed out.

The government increased petroleum products prices for the first time in 20 months in last February,while oil prices have nearly doubled in the past one year.

Crude touched a record o$126.40 per barrel in New York on Tuesday. The additional secretary, petroleum, S Sundaresan said the discussions “were very satisfactory”.

A decision on the quantum of oilbonds will be taken very soon, he said. The long-suggested SLR-status for the bonds wasn’t discussed either, Sundaresan said.

Such a status would help banks invest in the paper because by rule, they have to park a quarter of their deposits into instruments having ‘statutory liquiditiy ratio’ status.

Deora said there was no plan to meet the Prime Minister on the issue either.

In April-December 2007, the Centre issued oil bonds worth RS 20,333 crore, while ONGC, GAIL and OIL chipped in with Rs 15,873 crore.

The balance losses of Rs 11,413 crore was borne by IndianOIl, BPCL and HPCL.

Losses from selling fuels below cost may widen to Rs 180,000 crore in the year to March 31, Indian Oil’s finance director Serangulam V Narasimhan said on May 9. Refinery shares fell following the uncertainty on compensation.

Indian Oil, the largest state refiner, fell 0.2% to Rs 417.7, declining for the sixth straight day. Bharat Petroleum fell Rs 8.65, or 2.4%, to Rs 348.75. Hindustan Petroleum fell 0.4% to Rs 235.75.

Source : DNA