Government concerned about spiraling oil prices.

As the international crude prices soar towards $100 per barrel the union government is likely to issue additional oil bonds worth around Rs. 7000 crores to help the three oil marketing companies viz. Indian Oil, HPCL and BPCL, to tide over the under-recoveries owing to difference in consumer prices and input costs. Under–recoveries for the full fiscal year was previously estimated to be around Rs. 55000 crores but recent estimates suggest it to be around Rs. 70000 crores.

Though the price of Indian oil basket, which comprises of Oman-Dubai soar grade crude oil and Brent dated crude oil in a proportion of 59.8:40.2 ratio is not as high as $96 but has also increased sharply to $89.36 per barrel. Oil marketing companies are suffering heavy losses approximately Rs. 240 crores per day as the consumer price is fixed and has not risen with the appreciation of global crude prices. The government’s relief package of Rs. 23,458 crores of oil bonds are no longer sufficient as oil prices have proved wrong all the previous forecasts