Govt issues oil bonds worth Rs 5,750 cr

The Union Cabinet today issued oil bonds worth 5,750 crore to help restore the financial health of public sector oil marketing companies such as IOC, ONGC, HPCL and BPCL.

"It has also cleared the next batch of Rs 5,750 crore worth of bonds for the near future," Information and Broadcasting Minister Priyaranjan Dasmunshi said at a briefing after the meeting here today.

The oil bonds amounting to Rs 11,500 crore, to be issued in two equal tranches, will carry a fixed coupon rate to be determined on the basis of prevailing market rates on government securities.

For the first batch, Rs 2,000 crore worth of bonds will have a maturity of three years, another Rs 2,000 crore a maturity of six years and the remaining Rs 1,750 crore worth of bonds a maturity of nine years.

"The package may mitigate the situation of mismatch between domestic and international prices," a press release said.

The total under-recoveries of the oil marketing companies stood at Rs 20,146 crore in 2004-05, which is expected to bloat to Rs 39,704 crore during the current year.

The Cabinet also gave its approval for conversion of the Tripura Engineering College into National Institute of Technology with a deemed university status and full central institutional funding.

The Cabinet further gave its nod for introduction of the Assam Rifles Bill, 2006, and repeal of the Assam Rifles Act, 1941.

A police modernisation scheme for seven union territories with an outlay of Rs 884 crore for a five-year period starting 2006-07 was also given approval.

Besides, the Cabinet okayed a preferential trade agreement between Chile and India.