New Delhi, Aug. 1: The petroleum ministry has sought the resumption of the RBIs special scheme of foreign exchange to Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited (BPCL) in exchange of oil bonds.
In its credit policy review on July 29, the Reserve Bank of India had ended its special market operation (SMO), which gave the oil retailers foreign exchange to buy crude oil against bonds.
We have taken up the issue with the ministry of finance. In no way we can accept a situation where SMO does not exist, said S. Sunderesan, additional secretary in the ministry of petroleum and natural gas.
The three state-run retailers are given oil bonds by the government to compensate them for about half of their revenue loss from the sale of petrol, diesel, domestic LPG and kerosene. The bonds, if sold in the open market, fetch a discount and RBIs special market operation gave the retailers almost on par value.
State-run IOC, BPCL and HPCL are faced with a huge liquidity crunch because of rising differential between the price realised and the cost of production. On top of it, the finance ministry is yet to issue them oil bonds to compensate them for losses in January-March and April-June quarters.
There have been some reports of a shortage of diesel and restrictions on issue of new LPG connections. This is essentially due to liquidity problems, Sunderesan said.
The issue had been taken up at the highest level and arrangements were being made to ensure adequate liquidity, he said.
Sunderesan said his ministry had also approached finance ministry officials for raising the borrowing limits of the three companies.
IOC needs Rs 10,000-12,000 crore and HPCL and BPCL Rs 2000-3000 crore till September-end when we expect the bonds for the previous two quarters to be issued. Bonds can be issued only after Parliament passes the supplementary demands of grants.