The Hindu : Business : Oil PSUs fear over loss of Navaratna status

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Saturday, Feb 16, 2008
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Oil PSUs fear over loss of Navaratna status

Special Correspondent

SLR status to oil bonds being considered

Petrol, diesel hike may only partially cushion revenue loss
Oil bonds planned for Rs. 72,000 crore

NEW DELHI: The hike in the price of diesel and petrol by Re. 1 and Rs. 2 a litre on Thursday would go a long way in lessening the burden of issuing oil bonds to underwrite the losses of the oil marketing companies (OMCs) during the next financial year.

Sources in the Petroleum and Natural Gas Ministry said that although the revenue effect would be only Rs. 840 crore in the remaining six weeks of this financial year, the impact would be felt during 2008-09.

It would also put back on rail the expansion programmes of the OMCs which are understood to have put in place plans for major capacity expansion and acquisition of oil and gas assets, needing an investment of around Rs. 10,000 crore a year for the next three years.

“We are faced with a serious situation where the Department of Public Enterprises has sounded us a warning that we can lose the Navaratna status if we do not earn a certain amount of stipulated profits and turnover. This would have been disastrous for us as well as for our plans to undertake major expansion programmes,” Indian Oil Corporation Chairman Sarthak Behuria remarked. The Government has already approved issuing of nearly Rs. 72,000-crore worth of oil bonds this year. Thanks to the increased refining margins and the depreciation of dollar against the rupee, the savings in foreign exchange were substantial, the sources added.

On the other hand, Petroleum Secretary M. S. Srinivasan stated that at no point of time had said that the Finance Ministry had agreed to the Petroleum Ministry’s proposal for granting the Statutory Liquidity Ratio (SLR) status to oil bonds. He further said the matter regarding all issues relating to oil bonds to be released to OMCs was under the active consideration of the Government.

However, the sources said the Finance Ministry was considering giving the SLR status to oil bonds.

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