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The Finance Ministry has announced payment of ₹5,000 crore for oil bonds issued during 2005 and 2010 in lieu of selling oil product below the cost.
“The outstanding balance of ‘7.75% OMC GoI Special Bonds 2021’ is repayable at par on November 26, 2021,” the Ministry said in a statement. Further it mentioned that no interest will accrue thereon from the said date. In the event of a holiday being declared on repayment day by any State Government under the Negotiable Instruments Act, 1881, the loan/s will be repaid by the paying offices in that State on the previous working day.
Last month, the government paid ₹5,000 crore for another tranche of oil bond, taking total payout at ₹10,000 crore in the fiscal. After this, next tranche of ₹22,000 crore will be due in 2023. With this total principal amount pending would be over ₹1.20-lakh crore to be repaid between 2023 and 2026.
A mechanism of the regulated era, the bonds were issued to the oil companies for not increasing retail prices of petrol and diesel to reflect rising crude oil prices. The ‘under-recoveries’ of the oil companies due to their bearing the subsidy burden was converted into oil bonds by the then government. These bonds are interest-bearing, having a fixed coupon rate and paid on a half-yearly basis. The annual interest due of around ₹10,000 crore has been provided for in the Budget.
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