Petrol and diesel prices will not be hiked this year as the government on Thursday decided on a package including issue of oil bonds to offset the impact of surging international crude oil prices.
"We have kept our promise of not raising prices of sensitive petroleum products," Petroleum Minister Murli Deora told PTI after a meeting of the Cabinet.
Of the Rs 54,935 crore revenue loss that public sector oil firms are likely to suffer this fiscal for not raising prices of petrol, diesel, domestic LPG and PDS kerosene in line with cost, 42.7 per cent or Rs 23,457.24 crore would borne by the government.
Besides oil bonds, the Cabinet also decided to extend budgetary subsidy on domestic LPG and PDS kerosene for three more years from April 1, 2007, Deora said, adding that the government provides about Rs 2,680 crore from the budget to subsidise the mass-consumed cooking fuels.
Indian Oil, Bharat Petroleum and Hindustan Petroleum will get oil bonds worth Rs 23,457.24 crore. The first tranche of about Rs 11,800 crore to compensate for losses suffered in first half of 2007-08 would be issued by next week.
"Oil bonds as percentage of under-recovery is same as last year. In 2006-07, oil bonds worth Rs 24,121 crore were issued," he said.
Petroleum Secretary M S Srinivasan said 35 per cent or Rs 19,227.25 crore of the total under-realization in revenue would be borne by upstream firms ONGC, GAIL and OIL. Last year, the upstream firms contributed Rs 20,507 crore.
The remaining amount of under-recovery would be borne by IOC, BPCL and HPCL.
Briefing reporters of the Cabinet decision, Information and Broadcasting Minister Priyaranjan Dasmunshi said a meeting of the Cabinet chaired by Prime Minister Manmohan Singh extended existing LPG and Kerosene subsidy scheme for three years and approved scheme for sharing of under-recoveries.
"This decision will enable (the government) to continue subsidies on PDS kerosene and domestic LPG, and sharing the burden of oil marketing companies' under-recoveries on account of sale of sensitive petroleum products," he said.
IOC, BPCL and HPCL are currently losing Rs 4.34 a litre on petrol, Rs 6.9 per litre on diesel, Rs 15.95 a litre on PDS kerosene and Rs 175 per on LPG cylinder.
Prime Minister Manmohan Singh had earlier this week met Deora and Finance Minister P Chidambaram to discuss ways of mitigating the impact of surging price of international crude oil, which satisfies India's 73 per cent of fuel needs.
Deora said oil prices in the international market continue to be volatile. "In recent months, the Indian basket of crude oil touched a high of 77.20 dollars per barrel on September 21."
The Indian basket of crude oil averaged 75.85 dollars per barrel this month, up from September average of 74.83 dollars a barrel.