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Government to issue oil bonds worth Rs23,457 crore, extend fuel subsidynews
11 October 2007
Mumbai: The government will issue oil bonds worth Rs23,457 crore to partly compensate public sector oil companies for the losses incurred on fuel sales and keep prices of petrol and diesel stable, petroleum minister Murli Deora said after a cabinet meeting.The government also extended subsidies on fuels used by the poor by three years.

"The total under-recovery on fuel sales is estimated at Rs54,935 crore, Of this, 42.7 per cent is being borne by the government by way of issuing oil bonds,'''' Deora said.

"Upstream firms will share 35 per cent of the total under-recoveries and downstream sector will bear 22.33 per cent," an oil ministry official said.

The government will issue the first tranche of bonds worth Rs12,000 crore on October 13, the official said.

The government is expected to incur a revenue loss of Rs54,935 crore for the whole of fiscal 2007-08 on account of discounted fuel sales.

India, which imports 70 per cent of its crude oil requirements, last raised fuel prices to reflect higher crude rates in June 2006 but has subsequently rolled back the increase.

Crude prices are currently ruling around $81 a barrel.
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Government to issue oil bonds worth Rs23,457 crore, extend fuel subsidy