The Finance Ministry is keen about a hike in petrol and diesel prices to offset losses of oil firms, although it has agreed to issue oil bonds to insulate them from skyrocketing global crude prices.
“We like domestic fuel prices to go up before oil bonds can be issued. But it is not a precondition for issuing the bonds,” a key finance ministry official said.
Government-owned oil firms had sought an immediate hike in petrol, diesel, LPG and kerosene prices as they were losing over Rs 185 crore a day on the sale of these products. The government is exploring different options since the entire burden cannot be passed on to the consumer.
The recent Cabinet decision to offer 5 per cent government equity in Oil India to Indian Oil and 2.5 per cent each to HPCL and BPCL was also aimed at arming these companies with an option to sell these shares at a later date to compensate them for their under-recoveries.
While one estimate puts PSU oil firms’ losses on the sale of petrol diesel, LPG and kerosene at Rs 52,162 crore, the ministry is yet to work out the losses. Depending on that, the size of the oil bonds would be worked out.