Petroleum minister seeks increase in oil bond allocationOctober 30th, 2008 - 9:48 pm ICT by IANS
New Delhi, Oct 30 (IANS) With oil marketing companies expected to post losses in the second quarter, Petroleum Minister Murli Deora met Finance Minister P. Chidambaram to ask for an increase in the allocation of oil bonds to compensate for the sale of fuel at subsidised rates.“I am seeking a higher quantum of oil bonds, as under the present compensation package some oil companies have reported losses in their quarterly earnings,” Deora told reporters outside the North Block, seat of the finance ministry, after meeting Chidambaram.
Oil marketing majors Indian Oil Corp and Hindustan Petroleum Corp will announce their second quarter earnings Friday. The two companies are expected to announce a fall in profits on account of heavy subsidies.
The third state-owned oil marketing company, Bharat Petroleum, Thursday reported a loss of Rs.26.25 billion for the quarter ended Sep 30, in contrast to the net profit of Rs.10.38 billion it recorded in the corresponding period last year.
Till September, the three state oil majors had colelctively lost Rs.928.53 billion due to the subsidy burden. The estimated loss for the entire year is Rs.1,474.8 billion.
As per the formula, half of the losses are compensated by the government through oil bonds, with upstream companies adding another 33 percent to the kitty.
The minister is hoping that the rest of uncovered losses is also met by the government.
Meanwhile, India’s largest oil producer, Oil and Natural Gas Corp (ONGC), announced a 5.7 percent drop in profits in the second quarter due to a 233 percent increase in its contribution to oil marketing companies to help them tide over their subsidy burden.
ONGC contributed Rs.126.63 billion this year in the quarter ending Sep 30, compared to only Rs.37.9 billion last year.
“As far as I know, there is no formula (for how much subsidy has to be given),” ONGC chairman R.S. Sharma told reporters Thursday, adding that “ad-hoc decisions needed to be done away with”.
So far, the finance ministry has approved Rs.149.56 billion worth of bonds for the January-March period, with an additional Rs.244.08 billion for the next three months.
With oil companies leaking money, the minister stressed that international prices were too volatile to predict if there would be a cut in the domestic retail prices of transport fuel and cooking gas.
“I just cannot say that,” he told reporters. “What is happening (internationally) is unpredictable. Prices came down to $50 a barrel and today have risen to $70. You cannot decide in such volatile atmosphere.”