Govt to issue Rs 35000 crore oil bonds

The Finance Ministry agrees to issue oil bonds worth Rs 35,300 crore, or 46 per cent of the under recoveries of oil companies, reports HT Correspondent.

The government has decided to partially compensate public sector oil marketing companies against losses arising from subsidized sale of petrol, diesel, kerosene and LPG.

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The finance ministry has agreed to issue oil bonds worth Rs 35,300 crore, or 46 per cent of the under recoveries of oil companies, said a senior government official, a senior petroleum ministry official said.

The decision came at a meeting between Petroleum Minister Murli Deora and Finance Minister P Chidambaram, here on Tuesday.

The agreed amount falls short of petroleum ministry’s demand for Rs 44,000 crore, or 57 per cent, in compensation through oil bonds. Total under recoveries in 2007-08 are estimated at Rs 77,000 crore.

As of now, oil bonds of the face value of Rs.20,333 crore covering the period April-December 2007 have been received.

Until now, the government issued bonds up to 42.7 per cent of the total under realisation on fuel sale and another 33 per cent came from upstream oil companies—ONGC, GAIL and OIL.