Following sky-high crude oil prices, government-controlled Indian Oil Corp., Bharat Petroleum Corp. Ltd. and Hindustan Petroleum Corp. Ltd. say they are reeling under huge under-recoveries due to a government subsidy on petroleum products and cooking gas. They have written to the Ministry of Petroleum and Natural Gas saying if the situation is not remedied, they could go bust.

The government, in order to compensate these companies for their under-recoveries, has been issuing oil bonds, but now the situation is getting grave and soon these companies will be unable to pay crude suppliers, The Tribune (NYSE:TXA) newspaper reported Tuesday.

The oil companies said they won't be able to make timely payments to domestic crude oil producers such as state-run Oil and Natural Gas Corp. and Oil India Ltd.