Bonds worth over Rs 10,000 cr issued to three oil PSUs
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Last Updated: Tuesday, September 15, 2009, 22:25
New Delhi: The government on Tuesday issued bonds worth over Rs 10,000 crore to three oil marketing PSUs to compensate them for the losses incurred on account of selling petroleum products below market price.

While bonds worth Rs 6,207.06 were issued to Indian Oil Corporation, Rs 2,033.99 crore worth bonds were given to Hindustan Petroleum Corp and Rs 2,065.28 crore bonds were given to Bharat Petroleum Corp.

The Government of India (GoI) Special Bonds carry coupon rate of 8.20 per cent and would mature in 2024, an official statement said here.

The bonds were issued to these companies as they incur losses by selling petrol, diesel kerosene and domestic LPG below cost.

"The special bonds are being issued to three oil marketing companies as compensation towards the estimated under-recoveries on account of sale of sensitive petroleum products during the current financial year," the statement said.

These companies lose on account of selling petrol and diesel below cost, but that would be compensated by upstream firms like ONGC by way of discounts on crude oil and LPG they sell to the three retailers.

The three firms lose about Rs 170 crore per day and may end this fiscal with Rs 44,274 crore of losses if global crude prices were to stay at the current level of 70 dollars a barrel.

The investment in these bonds would not be counted for the mandatory requirement for banks and insurers to keep certain portion of their liabilities on government approved bonds.

Bureau Report

First Published: Tuesday, September 15, 2009, 22:25

Tag: Oil bondsPSU
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