Indian Oil Corp, the nation' biggest refiner, and its counterparts will get compensated for selling fuels at government-controlled prices at a time when crude oil costs have surged to a record.

The government may give 240 billion rupees (6 billion U.S. dollars) in bonds for the year ending March 31, M.S. Srinivasan, the most senior officer in the oil ministry, told reporters in New Delhi yesterday. Half the securities may be given by October 15.

State-run refiners in India have to sell gasoline, diesel and other fuels at government-capped prices to control inflation. They haven't been allowed to raise prices this year even as crude oil costs surged to a record, and companies including Hindustan Petroleum Corp and Bharat Petroleum Corp have sought a 15 percent increase in diesel prices and 6.7 percent in gasoline.

"Rising oil prices are a matter of concern," Srinivasan said. "We would finalize by next week the exact extent of losses the refiners may incur this year."

The refiners received 241.2 billion rupees worth of bonds in the fiscal year ended March 31.

The companies want an increase of 4.68 rupees a liter in diesel prices and 2.90 rupees on gasoline. They are seeking a nearly threefold increase in kerosene prices and 174.75 rupees on a 14.2-kilogram cylinder of liquefied petroleum gas.

Indian Oil is losing 810 million rupees a day from selling fuels below cost, Chairman Sarthak Behuria said last month.

"The oil bonds will help curb losses at refiners with crude near the record," R.K. Gupta, who manages 75 million dollars in stocks at Credit Capital Asset Management in New Delhi, told Bloomberg News.