Oil bonds may be back in reckoning to finance subsidies on retail sale of

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petroleum products. Since cash payments were not forthcoming as promised by finance ministry, the petroleum ministry has mooted oil bonds worth Rs 20,871 crore to be issued to government-owned oil companies towards meeting subsidy liability on products like kerosene and cooking gas.

S Sundaresan, additional secretary in petroleum ministry hinted that these bonds are likely to be issued for the first nine months as part of the first batch of supplementary grants to be presented by finance minister Pranab Mukherjee in the present session of Parliament.

“We have sought Rs 20,000 crore worth oil bonds to cover under-recoveries on LPG and kerosene in the first three quarters,” Sundareshan told reporters on the sidelines of second India-Africa Hydrocarbons Conference. The request has been sent to the finance ministry, which is likely to be tabled in the Parliament.

Interestingly, finance minister Pranab Mukherjee had taken credit for Rs 10,306 crore towards oil bonds for the entire financial year in his July 6 budget.

Earlier, in the interim budget, presented on February 16, Mukherjee had not mooted the issue of bonds, either for fertilisers or oil sectors towards meeting the subsidy bill.

Finance secretary Ashok Chawla had stated that cash payments would be made against oil and fertiliser subsidies and no oil bonds would be issued.

At present, three government-owned companies — IOC, BPCL and HPCL lose Rs 3.68 a litre on petrol, Rs 2.90 per litre on diesel, Rs 18.13 a litre on kerosene and Rs 250.67 per domestic LPG cylinder.

For the entire financial year, total losses for the three firms will be close to Rs 45,820 crore. In the previous financial year, the government issued oil bonds worth Rs 71,292 crore.

“We have placed our demand before finance ministry and it is now for them to get the approval from Parliament,” Sundareshan said.

IOC Chairman Sarthak Behuria, on the sidelines of the conference, told reporters that his company is losing Rs 94 crore per day on sale of petrol, diesel, domestic LPG and kerosene below the cost. IOC is to get Rs 11,852 crore worth of oil bonds for the three quarters while BPCL and HPCL would get a combined Rs 9,019 crore worth of government bonds.