India to issue $6 billion in bonds

The Indian cabinet has approved a proposal to issue bonds to state-owned oil marketing companies to partly compensate them for selling gasoline, gasoil, kerosene, and LPG at below cost prices. Based on government estimates of the retailers’ total under-recovery of around Rs 549.35 billion (US$14 billion), the bonds would offset 42.7% of the revenue lost by these state-owned companies  in the fiscal year ending March 2008, Petroleum and Natural Gas Minister M.S. Srinivasan said. India’s state-run oil marketing companies—under a government directive—have not raised the prices of kerosene since 2002 and LPG since 2004. The government determines the retail prices of gasoline, gasoil, LPG and kerosene by virtue of its majority stakes in Indian Oil Corp. (IOC), Bharat Petroleum Corp. Ltd. (BPCL) and Hindustan Petroleum Corp. Ltd. (HPCL), which together enjoy a nearly 90% share of the retail market. (October 15, 2007)