Rising inflation and crude oil prices will not result in any hike in fuel prices, at least for now. Petroleum Minister Murli Deora on Tuesday ruled out any hike in oil prices but sought oil bonds from the Finance Ministry to cover over half of the Rs 77,000 crore losses suffered by oil companies last fiscal.
Speaking to reporters after meeting Finance Minister P Chidambaram here, Mr Deora said there was no discussion on oil price hike and added that a decision on price increase could be taken only by the Cabinet.
Although he made the demand for bonds, Mr Deora failed to secure an assurance regarding issuance of oil bonds to compensate companies, whose under-recoveries have been ballooning on account of sale of fuel below cost price.
The petroleum minister wanted the Centre to agree for issue of oil bonds to cover 57.1 per cent of the losses saying that they were continuing to take hit from the spiral in global crude prices.
He told the finance minister that under-recoveries were increasing because of sale of fuel below cost price.
As of now, oil bonds worth Rs 20,333 crore have been issued for the period between April-December 2007, which leaves about Rs 15,000 crore to be covered.
“We have asked (for covering) 57.1 per cent (of losses with) oil bonds. And they are not ready for it. So we have requested him (finance minister) to issue as much as possible,” Mr Deora said.
He said there was no programme to meet Prime Minister Manmohan Singh on the oil bond issue. Compensation to oil companies for under-recoveries in this fiscal was yet to be firmed up.
Crude oil prices have eased from a record high of $126.20 a barrel, but are still trading at $123-level. India imports 73 per cent of its crude oil needs and the cost of imports would spiral as crude inches higher, while rupee is trading at a 13-month low.