Oil cos may need Rs 11000 cr more in bonds by March

The government may have to issue additional oil bonds worth Rs 11,000 crore to state-run oil marketing companies - Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) - in the fourth quarter of 2008-09. The bonds will compensate oil companies for keeping retail prices of petrol, diesel, kerosene and cooking gas below the cost during the year. The combined loss (under-recovery) of the three companies is estimated at Rs 101,445 crore for 2008-09. “Against an estimated under-recovery of Rs 101,445 crore for the entire fiscal, the government has already agreed to issue oil bonds worth Rs 60,967 crore. Public sector upstream oil companies such as Oil & Natural Gas Corp and Oil India have already contributed Rs 32,000 crore in the current fiscal. Balance under-recoveries will be met through additional oil bonds,” an oil ministry official said. At the end of the fiscal, the three oil companies - IOC, BPCL and HPCL - will not take any hit on their balance sheet. “A loss-making company can’t share the subsidy burden. They have already reported a loss of over 14,000 crore in the first half of 2008-09. Even upstream companies have done their bit by contributing Rs 32,000 crore. Balance under-recoveries would be met through oil bonds,” he said.