Companies

Oil bonds: HPCL, BPCL have sold most of their holdings to raise cash

Shishir Sinha New Delhi | Updated on July 31, 2021

Total current outstanding of oil bonds is about ₹1.30-lakh crore   -  istock.com/Gerasimov174

BusinessLine filed an RTI application to know about the current position on the bond holding

Hindustan Petroleum and Bharat Petroleum sold a large chunk of oil bonds in the open market, while Indian Oil Corporation has not sold any. The three oil marketing companies (OMC) were issued Special Bonds in lieu of cash subsidy between 2005 and 2010.

Oil marketing companies had two options available to them – hold the bonds to maturity and receive interest at regular intervals or sell them in the market if they needed liquidity. It appears that Hindustan Petroleum (HPCL) and Bharat Petroleum (BPCL) sold a large part of their holdings to raise cash.

Questions raised

This correspondent filed an application under the Right to Information (RTI) Act to know about the current position of bond holding. Though the questions were the same for all the three companies, each responded differently.

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The first question was: how many special bonds were issued to the OMCs between 2005 and 2010 by the Central government?

Indian Oil said that special bonds of face value of over ₹82,000 crore were issued, while HPCL said over 3 crore bonds were issued to it. BPCL confirmed allocation of 18 series of oil bonds. It did not specify either the quantity or value of bonds received by it.

The next question was: how many special bonds have been sold in the market by each of them, the cost of acquisition of such bonds and what was the realisation?

Indian Oil said that it did not sell any, while HPCL said it sold over 2.67 crore bonds in the market. BPCL’s reply was: “18 series of oil bonds have been sold in the open market of which 4 series of oil bonds have been sold partially.” It may be noted that every tranche of bond with different maturity and different coupon rate was given a distinguished series name.

However, both HPCL and BPCL remained silent on the next question on the cost. HPCL said that the cost of acquisition and realisation thereof is fiduciary in nature between the company and the government, and hence protected and exempted under Sec.8(1)(e) of the RTI Act. BPCL said that this information is of commercial nature and hence denied under the Act.

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On the number of bonds still on the book of the companies, Indian Oil said it had special bonds of the face value over ₹8,000 crore as on March 31, 2021, with the balance having been redeemed. For HPCL, the number is over 37 lakh while for BPCL, it was 4 series of bonds.

The total current outstanding of oil bonds is about ₹1.30-lakh crore, out of which ₹10,000 crore is to be repaid this fiscal and the balance in the next five years.

Published on July 30, 2021

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