Petrol and diesel prices are unlikely to be hiked in the near future, with Finance Minister P Chidambaram agreeing in-principle to share a third of the revenue loss that state-run oil firms incur on sale of fuel.
Chidambaram in a meeting with Petroleum Minister Murli Deora agreed in-principle to issue oil bonds to cover one-third of the under-realisation on sale of petrol, diesel, domestic cooking gas LPG and kerosene in 2007-08 fiscal, official sources said.
The quantum of the bonds would be decided once the two ministries agree on the losses the public sector oil firms were incurring on fuel sale, they said.
Government-owned oil firms had sought an immediate hike in petrol, diesel, LPG and kerosene prices as they are losing over Rs 185 crore (Rs 1.85 billion) per day on sale of the four products.
During 2007-08, PSU oil firms' losses on sale of petrol, diesel, LPG and kerosene has been estimated at Rs 52,162 crore (RS 521.62 billion), one-third of which would now be met through oil bonds.
An equal amount would be contributed by upstream firms like ONGC and GAIL by way of discounts on crude oil and LPG they sell to the refiners.
The remaining portion of the under-recovery would be absorbed by refiners Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum, the sources said.
The Indian basket of crude oil has risen over 30 per cent since February when petrol and diesel prices were cut by Rs 2 and Re one per litre respectively. Oil firms are losing Rs 5.88 per litre on petrol, Rs 4.80 a litre on diesel, Rs 189.14 per LPG cylinder and Rs 14.63 on sale of every litre of kerosene.
During the April-June quarter, Indian Oil, Bharat Petroleum and Hindustan Petroleum together lost Rs 1,553 crore (Rs 15.53 billion) on selling petrol, Rs 4,633 crore (Rs 46.33 billion) on diesel, Rs 4,028 crore (RS 40.28 billion) on kerosene and Rs 2,698 crore (Rs 26.98 billion) on domestic LPG.
Since passing on the entire impact of the steep increase in the oil prices to the consumers would have warranted an equally steep hike in the domestic fuel prices, the government has been taking all possible measures to ensure that there is no hardship to the common man, sources said.
IOC, which controls roughly half of the fuel market, is losing Rs 6.64 crore (Rs 66.4 million) per day on sale of petrol, Rs 40.12 crore (Rs 401 million) on diesel, Rs 30.55 crore (Rs 305 million) on kerosene and Rs 15.90 crore (Rs 159 million) on sale of domestic LPG.
The industry figures are roughly double these numbers.
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