Bonds worth Rs 12,000 crore likely to carry an interest rate of 7%. |
The petroleum ministry has suggested that oil bonds, to be issued to make up for the under-recoveries of oil companies, be of three to five years' duration and carry an interest rate of 7 per cent. |
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Officials told Business Standard that oil marketing companies would be issued bonds in proportion to the losses they have incurred in selling petroleum products below the import parity price. The bonds are likely to be issued in phases. The bonds are worth Rs 12,000 crore. |
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The officials said the finance ministry was in favour of issuing zero coupon bonds. |
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The petroleum and finance ministries are discussing the details of the bonds to be issued to Indian Oil Corporation, IBP Ltd, Hindustan Petroleum and Bharat Petroleum. |
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The finance ministry will approach the Cabinet for an approval once a consensus is reached. The bonds are likely to be issued after Parliament, during the winter session, approves supplementary demands for grants. This is to enable the oil companies to receive their benefits while accounting for the current year. |
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The nature of these bonds would be largely similar to the ones issued to oil companies after the dismantling of the administered price mechanism (APM), said an official. |
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Following the dismantling of the APM from April 1, 2002, the oil pool account was also wound up from the same date. The government had issued oil bonds amounting to Rs 9,000 crore on March 30, 2002. This was done with a view to partially liquidating the outstandings of the oil companies, estimated to be over Rs 14,000 crore, against the oil pool account. |
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These bonds had a maturity of seven years. |
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It was also decided then that the balance payable to these companies from the oil pool account on April 1, 2002 would be liquidated through Special Government Bonds. This was to be done after the completion of a special audit of these accounts, as directed by the Comptroller- and Auditor-General of India. |
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Parliament had cleared the issuance of the remaining bonds, amounting to Rs 5,762.85 crore, during the monsoon session. IOC will get Rs 2,320.80 crore and BPCL will get Rs 1,044.06 crore. The bonds have been issued at par. |
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