Government issues oil bonds worth Rs10,306 crore

The Government of India has announced the issue of '8.20 per cent `Oil Marketing Companies' Government of India Special Bonds, 2024' for a nominal amount of Rs10,306.33 crore.

The special bonds are being issued to three oil marketing companies as compensation towards estimated under-recoveries on account of sale of sensitive petroleum products during the current financial year. The special bonds will be issued at par to the three oil-marketing companies on 15 September 2009.

Of this, Indian Oil Corporation Ltd. (IOCL) will get the highest share of Rs6,207.06 crore, followed by Bharat Petroleum Corporation Ltd (BPCL) Rs2,065.28 crore and Hindustan Petroleum Corporation Ltd (HPCL) Rs2,033.99 crore.

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, a government release said.

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, the release said.

The Special Bonds will be transferable and eligible for market ready forward transactions (Repo).