IOC expects oil bonds worth Rs 6,200-crore

Indian Oil Corp (IOC) today said it is expecting oil bonds worth Rs 6,200-crore from the government to make good the losses it suffers on selling petrol, diesel, LPG and kerosene at below market rates.

The oil marketing company (OMC) also projected under-recoveries of Rs 24,000-crore in the current fiscal on sale of these four sensitive fuels.

"We currently hold Rs 19,700-crore worth of oil bonds. These will be sold in tranches at an appropriate time. We are to receive more bonds worth Rs 6,200-crore from the government and these will be shown as investments in the company when we get them," IOC Chairman, Sarthak Behuria, told shareholders at the company's AGM here.

Downstream firms Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum sell auto and cooking fuels at Government- mandated rates to rein in inflation and to protect consumers from volatility in international crude prices.

They are, in turn, compensated through oil bonds and one-third subsidy is given by upstream firms like ONGC, Oil India and GAIL.

"The government is expected to give Rs 30,000-crore worth of bonds to all three refiners this year," Behuria said.

Last week, Petroleum Secretary, R S Pandey, had said that IOC, BPCL and HPCL may lose about Rs 45,000-crore on selling auto and cooking fuels below cost this fiscal, two-third of which will be compensated through oil bonds.

Behuria said IOC is projected to lose Rs 16,000-crore on domestic LPG and kerosene, which will be compensated for by the government.

The OMC may lose another Rs 8,000-crore on petrol and diesel sales, to be compensated for by ONGC, OIL and GAIL.

"We lose Rs 90-crore per day on sale of these four senstive fuels," IOC Director Finance, S V Narsimhan, said.

IOC currently loses Rs 3.95 on every litre of petrol and Rs 2.71 per litre of diesel.

It also makes losses of Rs 152.42 on every 14.2 kg LPG cylinder, while on per litre of kerosene it incurs a loss of Rs 16.36.

"I think crude oil will have some near-term stability at around $75 per barrel," Behuria said.