The Hindu Business Line : ‘All issues relating to oil bonds under Govt consideration’

The Petroleum Secretary, Mr M.S. Srinivasan, on Friday said he hoped that oil bonds issued to public sector oil marketing companies (OMCs) will enjoy the statutory liquidity ratio (SLR) status. “We have taken up the issue with the Finance Ministry and I hope this finds a favourable consideration,” he told presspersons.

The Secretary’s statement puts to rest confusion caused due to media reports on the SLR status to the bonds. Reports started coming out from Friday afternoon from the sidelines of a FICCI function here quoting the Petroleum Secretary that the Finance Ministry had approved the proposal to give SLR status to the bonds. This had triggered a sell-off in Government bonds.

Following this, the Petroleum Secretary clarified that the Ministry had sought SLR status for the bonds and that no decision had been taken as yet.

Late in the evening, the Ministry also issued an official statement saying that all issues relating to bonds to be released to OMCs are under consideration of the Government. Grading such bonds as SLR-compliant enhances their attractiveness as banks can buy these bonds to meet the requirement of holding 25 per cent of their deposits as statutory liquidity.

The Government is expected to issue oil bonds worth around Rs 40,000 crore for the full fiscal to IOC, BPCL and HPCL to compensate them for under-recoveries on sale of fuel on subsidised rates.

While negotiating the terms for the oil bonds, the Petroleum Ministry 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.

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