Deora requests PM to issue Rs 21k-cr oil bonds

With Finance Ministry's defiance pushing fuel retailers into red, Oil Minister Murli Deora today requested Prime Minister Manmohan Singh to immediately issue over Rs 20,870 crore worth of bonds to state-run firms to make up for losses they incurred on fuel sales.

"I met Prime Minister with a request that oil bonds worth Rs 20,872 crore be issued immediately," Deora said.

Though the government had earlier this year explicitly decided to compensate Indian Oil, Hindustan Petroleum and Bharat Petroleum for the losses they incur on selling domestic LPG and kerosene through public distribution system by way of oil bonds, the finance ministry has not issued any bonds for the three quarters.

The three firms lost Rs 11,853 crore in revenues on not being allowed to raise LPG and kerosene prices in line with the cost during April-September. An additional Rs 9,019 crore revenue loss is estimated for the third quarter ending December 31, 2009.

Deora had on at least two occasions written to Finance Minister Pranab Mukherjee for issuance of oil bonds but the ministry did not provide any sum towards this in supplementary demands of grant (extra spending) that it got approved from Parliament this month.

"We have not got any bonds in the last three quarters. It is not possible to continue like this," Deora said pointing to BPCL and HPCL reporting net losses in Q2 while IOC barely making a profit.