As these bonds are longterm bonds. What will happen at the time when these bonds get matured for payment.

from where govt is going to raise money for paymet of these bonds.

Now these bonds have been monetiesed by the oil compaies by selling them in secondary market there by
utilising investible surplus of the economy for paying the crude oil bill which was not born by the real users of the product.

This has restricted your capital formation and slowing down of the growth rate of the economy.

Regards

Quarter-3 results of three OMCs make one believe that these companies came out with robust profit, except HPCL that even after that mystry returned loss of Rs 418 crores PBT. And the share prices of these companies are continuously on upswing after their Q3 results.

But the story of the profits of these companies is something else and it is surprising that market has completely given a blind eye and indulged into joy ride as the way the share prices of these companies are going up and up.

In the quarter three, these three companies got excess support by about Rs 8581 Crores from upstream companies and the Govt. oil bonds.

For this quarter total under recovery of these three companies were about Rs 13522 crores only. But against that, they got reimbursement of Rs 22103 crores, being Rs 6066 crores from upstream companies and Rs 16037 crores oil bonds. Thus they were given excess reimbursement by Rs 8581 crores and that went about Rs 1750 crores to HPCL, Rs 2098 crores to BPCL and Rs 4733 crores to IOC.

The declared PBT of these companies were Rs (-)418 crores HPCL , Rs 803 crores BPCL and Rs 2967 Crores IOC.

Without the excess reimbursement of the said Rs 8581 crores, normal PBT for the quarter would have been Rs (-) 2168 crores HPCL, Rs (-)1295 crores BPCL and Rs (-)1766 crores IOC.

So it is very surprising to see the run in the share prices of these companies after the kind of results they have actually given.

Another baffling fact is that, HPCL has logged out the worst performance but the share price of this company has run the most of all.

I was wondering if the GOI was bailing out the state oil companies why not the private ones also after all they have also invested money and want to sell the product in the market

look at all the wasted investment laying around

I dont understand the oil bonds but would my father loan me money knowing full well that its going down the drain?????

We have excellent money managers in the government but i guess votes count more than the country???

with the left out of the government now will everyone wake up?????

if you are giving out money to the oil SOBS why not me? my hands are also opened wide

This is the way Indian government deals with losses for subsidizing petrol price.

It works like this.

Let us say the actual petrol price/cost is Rs50 but The government controlled oil companies are forced by the government to sell petrol at Rs40.

Who will cover the loss of Rs10 – If it continues for a few months the companies will go broke and bankrupt.

The government steps in and issues a bond (Borrows/loans from the market)Investor attracted by the guaranteed interest buy the bonds.

The government pays the interest on the loan/bond.

At some stage the (Some) government has to repay the loan.

It is called sweeping the dirt under the carpet.
It is no different from drawing cash from one credit card to pay the other credit card.

One day it will blow up,but at that time it the problem of the next goverment.

My commonsense says it is not a good Idea to use this sytem commonly.

This system can be used scarcely for short time in small amount while the price is adjusted to reflect real world oil price.