'Include oil bonds for investment in PF trust': Chairman, IndianOil
New Delhi   03-Feb-2008
Following the reluctance on the part of State Bank of India, the fund manager of Employee Provident Fund Organisation (EPFO), public sector oil marketing companies (OMCs) have demanded inclusion of oil bonds for investment in provident fund trust. The move comes close on the heels of the clarification sought by SBI from the Government on the category of investment the bonds would attract as per EPFO guidelines. Leading the charge, IndianOil Chairman, Sarthak Behuria, has written to the Labour Ministry supporting the cause. In his letter, Mr. Behuria has stated that considering that -Special Oil Bonds were liquidated at spread over prevailing G-Sec (Government securities) yields; EPFO will earn better yields by investing in such bonds as compared to investment in G-Sec. This confusion continues to prevail despite a clarification issued by the Ministry of Finance through an office memorandum stating that oil bonds were Central Government securities issued in terms of the Public Debt Act and accordingly eligible as investment. The Government has been issuing oil bonds from time to time to OMCs for selling petrol, diesel, kerosene and LPG at subsidised rates to cover up for their under-recoveries. During 2006-07 the Finance Ministry had issued bonds to the tune of Rs. 24,121 crore and it had already issued bonds worth over Rs. 20,300 crore in the first nine months of the current financial year. It is estimated that the total oil bonds are likely to touch Rs. 28,000 crore by the end of the financial year. The bonds are liquidated by OMCs to meet their working capital requirements as well as reduce their borrowings. With SBI reluctant to participate on behalf of the EPFO, OMCs are forced to liquidate at a low price with limited buyers.