The petroleum ministry has asked the finance ministry to issue Rs 15,000 crore of additional oil bonds for the first six months of the fiscal 2008-09 in order to compensate its state-run oil marketing companies?Indian Oil, Bharat Petroleum and Hindustan Petroleum– for their losses on account of selling fuel below the cost price.

Official sources told FE that petroleum minister Murli Deora, who met Finance Minister P Chidambaram on Thursday, has asked for re-working the compensation package being given to the oil marketing firms in the light of high oil prices in the first half of the current fiscal. Deora is learnt to have asked Chidambaram to fully compensate the three OMCs for the under-recoveries incurred by them on fuel sales for the first six months ending September 2008.

Under the present package, the OMCs are partly compensated by the government by way of oil bonds (which are 50% of the under-recoveries of oil companies) besides sharing of the 33% burden by upstream firms like ONGC, OIL and GAIL. The balance share of burden is being borne by these oil companies themselves.

?The oil refining and marketing companies are in no position to absorb any amount of under-recoveries and we have requested the finance ministry to issue additional oil bonds for their share,? said a senior official.

The Parliament has already approved issuance of Rs 65,942 crore of oil bonds to IOC, HPCL and BPCL. However, out of this Rs 14,956.17 crore worth of oil bonds are for the last quarter of the previous fiscal i.e January-March 2008, while Rs 24,408 crore oil bonds are for the April-June quarter of the current fiscal and the remaining are for the July-September quarter. IOC, BPCL and HPCL in April-September have lost Rs 92,853 crore on fuel sales (audited figures)

Asked to comment, Deora said, ?My meeting today was essentially for seeking a higher quantum of oil bonds, as under the present compensation package some of the oil companies have reported losses in their quarterly earnings,? he told reporters after a 30-minute meeting with Chidambaram.

BPCL on Thursday announced a net loss Rs 2,625.27 crore for the second quarter ended September 30 as against a net profit of Rs 1,038.16 crore in the same period of last fiscal. The two other state owned oil firms?HPCL and IOC are also expected to report bad results in Q2 as well, petroleum secretary R S Pandey said.

Price cut? ?I can?t say?

Petroleum minister Murli Deora refused to commit if prices of petrol, diesel and cooking gas (LPG) would be cut, saying the international oil prices were volatile and unpredictable. ?I just cannot say that,? he told reporters when asked if the government would consider a cut in retail fuel prices given the easing crude price movement.

Crude is trading near $70 a barrel, less than half of the $147-a-barrel-high it touched in July this year. ?What is happening (internationally) is unpredictable. Prices came down to $50 a barrel and today have risen to $70. You cannot decide in such volatile atmosphere,? Deora said. The government raised fuel prices in June when oil started testing new peaks above $130 a barrel in the international market.