New Delhi: The Union Cabinet on Thursday decided to prevent any hike in petrol and diesel prices by issuing oil bonds worth Rs 23,458 crore to oil marketing companies to offset their losses.
The companies have made under-recoveries of 42.7 per cent because of global crude prices. Bonds worth Rs 12,000 crore will be issued on October 13, said Petroleum Secretary M S Srinivasan. There will be no hike in fuel prices till March 2008, he announced.
The subsidy on kerosene and LPG would be extended for three more years from April 1, 2007, said Information and Broadcasting Minister Priya Ranjan Dasmunsi.
Petroleum Minister Murli Deora on Wednesday ruled out any immediate hike in fuel prices, saying the government would ensure that the impact of global oil prices is shared by the domestic oil marketing companies whose under recoveries is expected to touch Rs 52,500 crore in 2007-08.
''The Government is closely monitoring the prices of petrol, diesel, PDS kerosene and domestic LPG,'' Deora said. The under-recoveries of the three OMCs—Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corportaion Ltd (BPCL)—have increased to about Rs 200 crore per day for the first half of this month from around Rs 180 crore in the previous fortnight after the Government stopped them to raise prices this year.
Talking on the global oil prices, he said it will continue to be volatile and the Indian basket of crude oil has touched a high of 77.20 dollars per barrel as on September 21.
There has been no revision in the prices of fuel in spite of consistent rise in international oil prices following softening of prices post August 2006. The government along with oil PSUs shared most of the burden of rising oil prices during 2006-07.
The government issued oil bonds worth Rs 24,121 crore to OMCs to partly compensate them for under recoveries on these products while upstream companies shared Rs 20,507 crore of the burden.
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