The Government today decided to extend the existing subsidy on domestic LPG and kerosene for a period of three more years from March 31, 2007. It also decided that 42.7 per cent of the total under-recoveries of oil marketing companies (OMCs) this fiscal would be borne by the Government in the form of oil bonds.

After a Cabinet meeting, information and broadcasting minister Priyaranjan Dasmunsi said, “The upstream oil companies may share about a third of the total under-recoveries of OMCs.” The oil ministry sent a letter to the finance ministry seeking the release of the first tranche of oil bonds by October 15 so that the OMCs can take it into their books of accounts, said oil ministry sources.

The under-recoveries of OMCs on sale of petrol, diesel, kerosene and domestic LPG would be about Rs 54,935 crore during 2007-08. It is estimated that oil bonds worth Rs 23,347 crore ( 42.7 per cent of the under-recoveries) would be issued this fiscal. The oil bonds as a percentage of under-recovery is the same as that last fiscal. In 2006-07, oil bonds worth Rs 24,121 crore were issued.

The one third of under-recoveries burden sharing by upstream oil companies, including ONGC, GAIL and OIL, is estimated at about Rs 18,311 crore. In the last fiscal, the upstream firms contributed Rs 20,507 crore. The remaining under-recoveries burden of about Rs 13,277 crore would be borne by downstream OMCs, including IOC, HPCL and BPCL. The Government is providing about Rs 2,680 crore from the Budget to subsidise mass-consumed cooking fuels this year.

... contd.