IOC expects oil bonds worth Rs 6,200 cr from govt

The oil marketing company (OMC) projected under-recoveries of Rs 24,000 crore in the current fiscal on sale of these four products. "We currently hold Rs 19,700 crore worth of oil bonds. These will be sold in tranches at an appropriate time. We are to receive more bonds worth Rs 6,200 crore from the government and these will be shown as investments in the company when we get them," IOC Chairman Sarthak Behuria told shareholders at the company's AGM in Mumbai.

Downstream firms Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum sell auto and cooking fuels at Government- mandated rates to protect consumers from volatility in international crude prices.

They are, in turn, compensated through oil bonds and one -third subsidy is given by upstream firms like ONGC, Oil India and GAIL. "The government is expected to give Rs 30,000 crore worth of bonds to all three refiners this year," Behuria said.

Last week, Petroleum Secretary R S Pandey had said IOC, BPCL and HPCL may lose about Rs 45,000 crore on selling auto and cooking fuels below cost this fiscal, two-third of which will be compensated through oil bonds.

Behuria said IOC is projected to lose Rs 16,000 crore on domestic LPG and kerosene, which will be compensated for by the government. The OMC may lose another Rs 8,000 crore on petrol and diesel sales, to be compensated for by ONGC, OIL and GAIL.

"We lose Rs 90 crore per day on sale of these four sensitive fuels," IOC Director Finance, S V Narsimhan, said. IOC currently loses Rs 3.95 on every litre of petrol and Rs 2.71 per litre of diesel.

It also makes losses of Rs 152.42 on every 14.2 kg LPG cylinder, while on per litre of kerosene it incurs a loss of Rs 16.36. "I think crude oil will have some near-term stability at around USD 75 per barrel," Behuria said.