Centre moots SLR status for oil bonds

New Delhi, Feb 15 | Updated: Feb 16 2008, 03:26am hrs
The government on Friday said the issue of granting statutory liquidity ratio (SLR) status to bonds issued to oil companies is under consideration and no decision has been taken as yet.

We have sought SLR status for oil bonds and the finance ministry is considering it, petroleum secretary M S Srinivasan told reporters here.

The government is expected to issue oil bonds worth around Rs 40,000 crore to Indian Oil, Bharat Petroleum and Hindustan Petroleum in 2007-08 to compensate them for under- recoveries on sale of fuel on subsidised rates. Of this, bonds worth about Rs 11,000 crore have already been issued by the finance ministry. In 2006-07, oil bonds worth Rs 24,121 crore were issued.

The petroleum ministry, while negotiating the terms for the oil bonds, had conveyed to the finance ministry that oil companies were facing difficulties in disposing the existing bonds due to their non-SLR status and long tenures.

Oil companies were able to sell only a limited number of bonds in the market and that too at a discount, it had said.

While raising the petrol prices by Rs 2 a litre and diesel by Re one a litre on Thursday, the Cabinet Committee on Political Affairs also decided to increase to 56-57% the share of compensation that is to be met through issue of oil bonds for selling the fuel below cost price. The current level is 42.7% cent of the under-recoveries. Oil companies had claimed total under-recoveries at Rs 71,808 crore for the current fiscal, and are likely to get Rs 840 crore after the hike in petroleum prices.