The issuance of oil bonds worth Rs 65,942 crore to the three state-owned oil marketing companies?Oil, Bharat Petroleum and Hindustan Petroleum?is now awaiting the President?s nod and expected sometime this week. The oil bonds will make up for the revenue losses incurred by the oil companies on fuel sales during the first six months of the current fiscal as also for the last quarter of 2007-08.

?The parliament has already approved (issue of oil bonds)….We expect finance ministry to intimate of the bonds anytime now,? said petroleum ministry additional secretary S Sundareshan on Wednesday.

Meanwhile, Sundareshan clarified that the government was not considering reduction in prices of petrol, diesel and domestic LPG despite crude falling to its lowest-level in 15 months as prices have to stablise at this level to wipe out the current revenue losses on fuel sales.

?There is no proposal to reduce fuel prices. We have to watch (the) situation for a few more weeks,? said Sundareshan.

The basket of crude that India imports averaged at $56.72 per barrel on Tuesday, a level at which the three state-run oil marketing firms would break even if global prices were to stabilise for a month.

?Price reduction cannot be on the basis of price of one or two days. Yesterday it was at $56 but today it has gone up (again) by two dollars. We need prices to stabilise before we can think of a price reduction,? he said.

The country?s second largest oil marketing firm BPCL is to announce on Thursday its earnings for the July-September quarter while HPCL and IOC will to do so on Friday. Without the oil bonds, the three would post huge losses. ?Even with oil bonds, things are not going to be any better but certainly they will help ease the liquidity concerns of the companies for some more months,? he said.

The three firms would get Rs 14,956.17 crore worth of oil bonds for selling petrol, diesel, domestic LPG and kerosene below cost in January-March quarter. They will get an additional Rs 24,408 crore compensation for April-June quarter and the remaining will be for July-September quarter.

The government compensates half of the losses resulting from its dictate to oil companies to not to raise fuel prices in line with cost, through issue of oil bonds. For 2007-08, the oil companies reported a total revenue loss of Rs 70,579 crore, of which Rs 35,289.50 crore is to be compensated through oil bonds. The government has already issued, oil bonds worth Rs 20,333.33 crore for April-December 2007 period.

IOC, BPCL and HPCL in April-September lost Rs 92,853 crore on fuel sales (audited figures) and are projected to lose Rs 1,47,486 crore in the full fiscal. Half of the projected revenue loss is to be compensated through oil bonds.

The three OMCs, which in April-September reported a Rs 92,853 crore revenue loss (audited figure) on sale of petrol, diesel, LPG and kerosene, are likely to post bad results when they report on quarterly earnings over the next two days.

?Prices need to stabilise for four weeks (at current level) for us to consider a price cut,? Sundareshan said.

A sharp depreciation in the value of the rupee against the dollar has wiped away some of the gains from falling international crude oil prices. The three firms were to break even on fuel sales at $67 per barrel crude oil when $1 was equivalent to Rs 41. However, with rupee at the 50-mark, the breakeven point has now shifted to $57 per barrel.

Retailers sell petrol at a loss of Rs 2.85 a litre, diesel at Rs 7.26, kerosene at Rs 29.19 per litre and domestic LPG at a loss of Rs 333 per cylinder. IOC, BPCL and HPCL in April-September lost Rs 92,853 crore on fuel sales (audited figures) and are projected to lose Rs 1,47,486 crore in the full fiscal.

Oil company officials said cutting fuel prices at this stage would widen the revenue loss of state-run firms. ?I do not see a trigger, unless political, for a reduction in fuel prices.?

?For a price cut to happen, international oil prices have to sustain at levels lower than the break even point, for at least a month. We cannot be seen lowering the prices on one day?s fluctuations. Tomorrow, if the prices go up, will the oil companies be allowed to raise prices,? the official said.

Deora is believed to have met Prime Minister Manmohan Singh on the issue last week and had been advised to wait for global oil prices to fall further before taking the issue to the Cabinet. Every time dollar becomes dearer by Re 1, the revenue loss on fuel sales jumps by Rs 8,500 crore.