The oil pool deficit of around Rs 10,500 crore, accrued in first six months of the fiscal, has already been dealt with by the government through a mix of duty reductions and the recent price hike. Issuance of oil bonds seems a remote possibility and the petroleum ministry has already started looking at alternative financial instruments to tackle the oil pool deficit. This was hinted at by Union Petroleum Minister Ram Naik while talking to reporters in the capital on Monday.

Mr Naik said that the government is yet to take a final decision on the issuance of petro bonds and its modalities.

"Oil bonds could be issued for a shorter period of one to two years and there would be no difficulty in servicing these bonds. A situation may also arise that the government may not even exercise the oil bonds option. It all depends on the global crude oil prices", the minister said.

The petroleum ministry's strategy of zeroing the oil pool deficit by the end of the fiscal rests on the trend staged by the international crude oil prices. If the oil prices stabilises to around $24 a barrel, then there will be no need to go in for oil bonds or exercise any other option. However, if the prices do not stabilise to expected levels, then the petroleum ministry will have to work out alternative financial instruments of tackling the oil pool deficit besides asking the finance ministry to refund the Rs 4,500 crore appropriated by it in the public account fund For the present, the government would closely monitor movement of crude prices in the international market for at least 45 days before deciding the future course of action, Mr Naik said.

The petroleum minister's plan of asking the states to reduce sales tax and pass on the incremental increase in revenue generation on account of increasing global crude oil prices, has met with complete failure.

Not a single state government, even after Mr Naik personally wrote to all the state chief minister's on the sales tax issue, has replied so far.

On avoiding the petro-price roll-back issue, Mr Naik said that this decision will now be taken by the prime minister and that he has already conveyed the implications the roll-back would have on the country's economy.

"As far as I am concerned, the issue of petro prices is settled. The prime minister will now take a decision on the issue after he comes back from the knee surgery," Mr Naik said.

Stating that certain political parties were trying to politicise the issue, Mr Naik said the decision to increase prices was taken to check the burgeoning oil pool deficit.

Mr Naik said that he had written to all member of parliaments explaining the circumstances under which the government had resorted to increasing the prices of petrol, diesel, LPG, kerosene and aviation turbine fuel (ATF).

Defending the government's decision, the minister said the percentage of increase in petroleum product prices was the lowest when compared with price hike effected by four previous governments. While Mr VP Singh's government had increased diesel prices by 23.77 per cent in October 1990, Mr PV Narasimha Rao's government had increased the same by 20.99 per cent in September 1992. "Mr HD Deva Gowda and Mr IK Gujaral had increased diesel prices by 29.51 and 28.93 per cent respectively. In contrast to this, we have hiked diesel prices by only 17.88 per cent", Mr Naik added.