India to issue $3.6 bln bonds to state oil refiners

NEW DELHI, May 13 (Reuters) - India will issue bonds worth 150 billion rupees ($3.6 billion) to state oil refiners for the quarter that ended on March, to compensate half the revenue loss incurred for selling fuel at state-set low prices, a government official said on Tuesday.

This would raise the total amount of bonds issued for 2007/08 to 353 billion rupees, of which about 203 billion had already been issued for April to December, he said.

“This decision is expected to provide a much needed relief to the oil marketing companies,” the official, who did not want to be named, said after a meeting Finance Minister Palaniappan Chidambaram and Oil Minister Murli Deora.

India, which imports 70 percent of the fuel it consumes, caps retail prices to soften the blow of high global prices on domestic consumers.

State-run refiners like Indian Oil Corp IOC.BO, Bharat Petroleum Corp BPCL.BO and Hindustan Petroleum Corp HPCL.BO are incurring huge losses in revenue because of high global crude prices CLc1 that hit a record $126.40 a barrel on Monday.

During 2006/07, the government had compensated 42.7 percent of the revenue losses of state oil refiners and issued bonds worth 21.21 billion rupees.

Crude oil prices are up more than three quarters since mid-2006, hitting a record above $126 a barrel this week but India has raised retail prices only once by just 3-4.6 percent in February. ($1=42.1 rupees) (Reporting by Rajkumar Ray; Editing by Ranjit Gangadharan)