Finance Minister Pranab Mukherjee and Petroleum Minister Murli Deora, who met Thursday to discuss the proposed fuel prices hike, were unable to agree on the quantum of support to be given to oil marketing companies for losses incurred by sale of subsidised petroleum products.
“No decision was taken,” Deora told reporters outside North Block, where the finance ministry is headquartered.
Deora had Wednesday evening met Prime Minister Manmohan Singh to review the oil sector, including the health of the public sector oil companies.
Petroleum Secretary R.S. Pandey said Mukherjee and finance ministry officials were told about the under-recovery (losses) of the three marketing companies -- Indian Oil, Bharat Petroleum and Hindustan Petroleum -- which is likely to be around Rs.45,000 crore this fiscal.
On its part, the finance ministry has argued that crude prices had not gone up as spectacularly this year as it had in 2008-09.
Last year, the government had announced that all losses would be compensated through issue of oil bonds and sharing of the burden with upstream oil companies like Oil and Natural Gas Corp and Oil India.
However, finance ministry officials have indicated that the compensation may not be as much as demanded by the petroleum ministry.
When asked by reporters on how the compensation would be paid, Pandey said: “Most probably in cash.”
He told television channel CNBC TV-18 that price hike was not on the agenda at the meeting with the prime minister.
“There are forums for considering price hikes, which are done by cabinet or committees. This was review of the sector by the prime minister. There has been huge volatility in oil prices and the companies have been impacted by it. So, the major companies' financial performances were reviewed,” said Pandey.