[orc] Many BJP leaders including the petroleum minister were quoted as saying that the current government repaid more than ₹ 1.5 lakh crore worth oil bonds which were issued during the previous UPA government. The BJP’s official twitter handle put out an infographic which claimed that the current government repaid pending oil bonds worth ₹ 1.3 crore with an interest of ₹ 40,000 crore.
The BJP’s official twitter handle posted an infographic in September 2018 which said that the current government repaid more than ₹ 1.3 lakh crore worth oil bonds which were issued during the previous UPA government. Now the government has confirmed in the Rajya Sabha that it repaid only ₹ 3,500 crore worth oil bonds while bonds worth more than ₹ 1.3 lakh crore are still pending.
What the economist PM Manmohan Singh said & did on petroleum prices? He said that money does not grow on trees & left unpaid bills of oil bonds worth Rs. 1.3 lakh crore. Modi govt paid off the pending bills with interest because ‘we should not burden our children’. #NationFirst pic.twitter.com/Z8zTV1kG1i
— BJP (@BJP4India) September 10, 2018
Factly had earlier done a Fact Check based on data available in the budget documents to conclude that the Modi government has only repaid oil bonds worth ₹ 3,500 crore. The Petroleum Planning & Analysis Cell (PPAC) under the Ministry of Petroleum & Natural Gas had also confirmed that the government indeed repaid only ₹ 3,500 crore worth oil bonds. Now the government has confirmed the same in response to a question in the Rajya Sabha.
What are oil bonds & who all issued these bonds?
Oil Bonds were issued by the governments during the days when the prices of petrol/diesel were regulated. Instead of paying the Oil Marketing Companies (OMCs) for the subsidies extended on petrol/diesel & other oil products, the governments used to issue oil bonds as compensation to these companies which are like government securities. These securities are usually long dated securities of 10-20 years. For instance, look at this notification of the Oil Bonds issued during the UPA.
Oil Bonds were issued by all the previous governments till 2010 when the petrol price was deregulated. Even the previous NDA government under Atal Bihari Vajpayee issued oil bonds. In his budget speech of the 2002-03 budget, the then Finance Minister, Yashwant Sinha mentioned that the government will issue oil bonds.
What is the worth of Oil Bonds pending?
The budget documents available in the public domain reveal the information of pending oil bonds and the amount of interest to be paid on these oil bonds. As per annexure 6E of the receipt budget 2014-15, titled ‘Special Securities Issued To Oil Marketing Companies In Lieu Of Cash Subsidy’, the total value of pending oil bonds by the end of 2013-14 was ₹ 1,34,423 crore. This is when the NDA government took over. As per this document, the pending liabilities related to Oil Bonds were ₹ 1,34,423 crore. The only set of bonds due for maturity during 2014-19 period (the Modi government’s term) were the two sets of bonds which matured in 2015, totaling ₹ 3500 crore. Even this part was confirmed by the government in its response to a question in the Rajya Sabha.
Even the annexure 2E of the receipt budget of 2019-20 show the same set of pending liabilities. In other words, the pending liabilities when the Modi government took over were ₹ 1,34,423 crore and by 2018-19, the liabilities stand at ₹ 1,30,923 crore. In effect, the modi government repaid only ₹ 3,500 crore worth of oil bonds which matured in the year 2015.
What about interest on Oil Bonds?
The interest payments of Government of India are captured in a document titled ‘Interest Payments’ in the demand for grants of the Ministry of Finance under the expenditure budget. All the interest payments made by the government are noted in this document including the interest on special bonds to oil companies. The data of the last 20 years suggests that various government (both UPA & NDA) have been paying interest on oil bonds. The interest liability increased substantially during the UPA-1 because of the issue of multiple oil bonds. The UPA-2 paid a total of ₹ 53,163 crore in interest for oil bonds in the 5-year of period between 2009-10 and 2013-14. On the other hand, the current NDA government paid a total of ₹ 50,216 crores in the 5 year period between 2014-15 and 2018-19. They have also budgeted an interest payment of ₹ 9989.96 crore for 2019-20.
The interest payments for the last 5 years also clearly indicate that there was no change in the outstanding amount, hence no repayments in the last 5 years except in 2015. Though it is true that the Modi government paid an interest of over ₹ 50,000 crore in the last 5 years, the UPA-2 had also paid a similar if not a greater amount of interest during their term.
Government confirms this in the Rajya Sabha
In the answer provided to unstarred question 296 in the Rajya Sabha (on 12th December 2018), Dharmendra Pradhan, the minister in-charge of Petroleum & Natural Gas confirmed the same, that oil bonds worth ₹ 1.3 lakh crore are still pending.