The Hindu Business Line : Ministry plans talks on size of oil bonds

New Delhi May 26 The Petroleum Ministry plans to begin discussions with the Finance Ministry on the size of the oil bonds for the current fiscal to be issued to oil marketing companies to compensate them for the losses suffered on the sale of four petroleum products below the cost price.

A senior Petroleum Ministry official said the issue was likely to be taken up with the Finance Ministry next month. As per the initial estimates, the oil marketing companies are expected to incur under realisation of about Rs 50,400 crore on the sale of petrol, diesel, cooking gas and kerosene through the public distribution system at the current level of crude prices.

The estimated under recovery numbers would have been higher had not the rupee appreciated. The Indian currency has appreciated about 9 per cent against the dollar since the start of the current calendar year.

With the spiralling crude prices, the under recoveries suffered by the oil marketing companies are also on the rise. The country's crude oil basket on Thursday rose 84 cents a barrel from a day earlier to $68.87.

The Government partially shares the revenue loss of oil companies by issuing bonds. Upstream companies also share the losses through discounts in crude oil to the refiners, while a small part of the losses are passed on to the consumers.

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