Bonds worth over Rs 10,000 cr issued to three oil PSUs

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
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