The Government, in this financial year, will issue Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) oil bonds worth over Rs 40,212 crore at enhanced rates. Upstream firms like ONGC and GAIL will contribute 33 per cent (Rs 23,700 crore), while the remaining Rs 71,808 crore under-realisation will be borne by retailers.

Officials said finance minister P Chidambaram opposed the Petroleum Ministry’s demand for a Re 1 per litre reduction in excise duty on petrol and diesel. Earlier, a Group of Ministers (GoM) headed by external affairs minister Pranab Mukherjee had left a decision on fuel prices to the Cabinet after the panel was vertically divided on the issue. Petroleum minister Murli Deora insisted on a duty cut rather than price hike, while finance minister P Chidambaram was opposed to any pre-Budget duty rejig.

Petrol and diesel prices were last raised in June 2006, when crude oil was at $67 a barrel. It is at $92 a barrel this year.