Oil bonds were issued in lieu of cash subsidy to oil marketing companies (OMCs) in former Prime Minister Manmohan Singh’s UPA era, and also Atal Bihari Vajpayee’s NDA rule. These sovereign oil bonds, issued in favour of oil companies Indian Oil Corporation, HPCL and BPCL, were transferable, allowing these companies to raise immediate cash at the time.
Even as petrol and diesel prices in India have not been revised by OMCs for the last one month, more than half the country has petrol at over Rs 100 per liter.
Finance Minister Nirmala Sitharaman clearly opined that there will be no cut in excise duty on fuel as of now, saying the government has to pay for the oil bonds issued by the UPA government in the past.
“I can’t go by the trickery that was played by the previous UPA government. Due to oil bonds, the burden has come to our government, that’s why we are unable to reduce prices of petrol and diesel,” FM Sitharaman said, blaming the previous government by Manmohan Sing.
She added, the government has paid over Rs 70,195.72 crore in interest on these bonds in the last seven years.
The previous government had issued oil bonds worth Rs 1.34 lakh crore to the OMCs, of which only Rs 3,500 crore of principal had been paid. While for the next six years, the government has a total debt obligation worth Rs 1.30 lakh crore.