Date:26/08/2006 URL: http://www.thehindu.com/2006/08/26/stories/2006082607411500.htm

Business

Coupon rate for oil bonds at 7.5-8 p.c.

Special Correspondent

Cut in excise duty sought by Ministry

NEW DELHI: The Union Government has said the oil bonds to be issued to oil marketing companies to compensate them for selling petroleum products below cost price would carry a coupon rate of 7.5 to 8 per cent. Disclosing this here on Friday, Petroleum Secretary M. S. Srinivasan said the coupon rate would correspond to the PLR (prime lending rate).

The oil bonds worth about Rs. 28,300 crore are being issued to these companies to partly offset their estimated losses of over Rs. 74,000 crore on sale of oil products below cost price.

Mr. Srinivasan told reporters that the Petroleum Ministry was holding talks with the Finance Ministry to finalise the details of oil bonds. The Government would initially issue oil bonds worth Rs. 14,150 crore to the companies, which would be allowed to sell the bonds. He said they would also be allowed to offset them against the statutory liquidity ratio.

Mr. Srinivasan said the Ministry had also sought a cut in the excise duty on each litre of petrol and diesel to reduce the losses being suffered by the public sector oil companies.