In a bid to restore heavy loss of Oil Marketing Companies, Government of India on Tuesday issued a special bond of worth Rs 22,000 crore to three leading OMCs: Indian Oil Corporation, Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd.
The special oil coupon bond would partially compensate the OMCs while the first round of oil bond of same amount is still pending, the Ministry of Petroleum said in a released statement.
The oil coupon will mature in 2024 with 6.35% of interest rate in which Finance Ministry said, ‘the investment in the Special Bonds by the banks and Insurance Companies will not be reckoned as an eligible investment in government securities for their statutory requirements.
However, such investment by the insurance companies will be eligible to be reckoned as investment under “other Approved Securities” category as defined under Insurance Regulatory and Development Authority (Investment) Regulations, 2000.’
“Further, the investment by the Provident Funds, Gratuity Funds, Superannuation Funds, etc. in the Special Bonds will be treated as an eligible investment under the administrative order of the Ministry of Finance,” added Ministry of Finance (MoF).
“The Special Bonds will be transferable and eligible for market ready forward transactions (Repo),” said MoF in the statement.
IOC, the largest OMCs of India in the released coupon would get Rs 11,975.51 crore while HPCL and BPCL would get Rs 4693.73 crore and Rs 5330.76 crore respectively, release said.
This year, the OMCs have estimated a total revenue loss of Rs 1,10,381-crore in terms of fuel selling. However, in petrol and diesel, the OMCs are at present not bearing the loss the crude oil prices in the international market has dipped from all time high of over $147 to below $40, but due to higher subsidy in kerosene oil and domestic liquid petroleum gas (LPG) cylinder, it is still shouldering heavy loss.
OMCs have to bear a continuous loss of Rs 17.26 per litre on kerosene oil and Rs 148.38 on each domestic LPG cylinder, sources said.
To revamp the heavy loss of OMCs, Parliament had approved the release of nearby Rs 66,000 crore of oil bonds comprising the loss of fourth quarter of last fiscal (January to March 2008) and the first half of current fiscal (April to September 2008) last month.
A quantum of Rs 14,500 crore would be given to reimburse the loss of fourth quarter of last fiscal while Rs 44,967 crore for recuperate losses on sale of petroleum products during the first half of the current fiscal.
To aid OMCs and to provide forex reserve, the Reserve Bank of India on Tuesday bought oil bonds worth Rs 195 crore from BPCL and HPCL under special market operations.
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