Trade with Commodities: Govt Bonds To Help IndianOil, HPCL & BPCL Close Financial Year In Black

Tuesday, May 19, 2009

Govt Bonds To Help IndianOil, HPCL & BPCL Close Financial Year In Black

Oilcos get a Rs 10k-cr lifeline

THE government has issued bonds worth Rs 10,305 crore for 2008-09 to the three state-owned oil marketing companies — IndianOil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) — partially compensating their revenue losses arising from the sale of fuel at governmentdetermined rates, which are often below the cost.
    The government controls the pump prices of four petroleum products — petrol, diesel, kerosene, sold through fare-price shops, and cooking gas, sold through the three oilcos.
    Letters related to full and final bonds for the previous fiscal have been issued to the three oil companies. While IOC has received bonds worth Rs 6,207 crore, HPCL and BPCL have got bonds of Rs 2,033 crore and Rs 2,065 crore, respectively, for the last quarter of 2008-09, an official in the oil ministry, who didn't wish to be named, said.
    An IOC official confirmed that the company has received the letter and the bonds will help it to close the financial year in the black.
    According to the oil industry, HPCL may require some additional help in the form of upstream discount to close the fiscal year in profit. The oil ministry official said that state-owned upstream companies such as ONGC and Oil India (OIL) may be asked to contribute up to Rs 1,000 crore to the oil marketing companies in distress.
    The three public sector firms, finalising their annual results for 2008-09, were waiting for the oil bonds to factor them in their balance sheets. They are expected to announce their financial results for the fourth quarter of 2008-09 and final results for the fiscal year by the end of this month.
    The three public sector oil companies lost about Rs 103,300 crore in 2008-09 by selling the four fuels below cost price. The government has issued oil bonds worth Rs 60,967 crore to the three companies so far. They have also received discounts worth Rs 32,000 crore from state-owned upstream companies ONGC, IOC and Gail India on the purchase of raw materials such as crude oil and liquefied petroleum gas (LPG).