Government issues special oil bonds

Mumbai, March 23 | Updated: Mar 24 2006, 05:30am hrs
The government of India has announced the issuance of special bonds to the oil marketing companies, on Thursday, said Reserve Bank of India (RBI), in a release. Government will issue 7.07% Oil Marketing Companies Government of India Special Bonds, (2009) worth Rs 2,000 crore, 7.44% Oil Marketing Companies Government of India Special Bonds, (2012) worth Rs 2,000 crore and 7.59% Oil Marketing Companies Government of India Special Bonds, (2015) for Rs 1,750 crore.

These bonds would be issued to three oil-marketing companies to compensate them for under-recoveries in their domestic LPG and Kerosene (PDS) operations during the current financial year.

These special bonds are issued at par to Indian Oil Corporation Ltd (IOCL) for Rs 3,542.95 crore, Bharat Petroleum Corporation Limited (BPCL) for Rs 1,062.31 crore and Hindusthan Petroleum Corporation Limited (HPCL) for Rs 1,144.74 crore on March 23, 2006.

This kind of bond issuance would not impact the liquidity condition in the market as they are being issued to the oil companies. Moreover, the issuance of the special bond was expected in the market and was announced over a month back, said a primary dealer. Also, the investment in these bonds will not be reckoned as an eligible investment for purpose of SLR.

These bonds will be transferable and eligible for market ready forward transactions (Repo) and will not be an eligible underlying security for ready forward transactions (Repo/Reverse Repo) with the RBI, says the release.