The Modi led NDA government has increased the excise duty on petrol & diesel multiple times during the last 6 years. Though there has been a substantial fall in the global crude oil price, the same benefit has not been passed onto the customers. One major reason cited for not reducing the prices is the burden of oil bonds. What is the pending burden of oil bonds? How much has the current government repaid? Here are the details. On 13 March 2020, the Government of India increased the excise duty onpetrol and diesel by ₹3 per litre. The hike in special excise duty on petrol and diesel was by ₹ 2, taking the total to ₹10 per litre for petrol and ₹ 4 per litre for diesel. Additionally, the road cess on both petrol and diesel was increased by ₹ 1 each from ₹ 9 per litre, taking the total to ₹ 10 per litre for both petroland diesel. While this move will help the government garner additional revenuein these bleak times, this increase comes at a time when the global crude oilprices are witnessing a sharp decline. The opposition led by the Congress criticized the government over thishike and alleged that the government was not transferring the benefits of fallin crude oil price to the people. Rahul Gandhi took on to twitter to criticize the finance minister for the hike. During the recent budget session of parliament, the government passedthe Finance Bill which givesthe government the power to increase additional excise duty up to ₹18 per litreon petrol and up to ₹ 12 per litre for diesel. Since the NDA came to power, theexcise duty on petrol & diesel has been increased multiple times. One of the major reasons cited earlier by the Bharatiya Janata Party fornot reducing the taxes is the burden of repayment of oil bonds that were issuedduring the Congress led UPA’s term. There have been instances during the previous term of the NDA Government where claims have been made by those in the government that they repaid more than ₹1.5 Lakh crore worth oil bonds which were issued during the Manmohan Singh ledUPA government. Even in the Bharatiya Janata Party’s twitter handle, an infographic claiming that the NDA government repaid pending oilbonds worth ₹ 1.3 Lakh crore and an interest of ₹ 40,000 crores was posted inSeptember 2018. Factly had earlier done a fact check on this claim using data available in the budgetdocuments. It was found that the NDA Government had repaid oil bonds worth ₹3,500 crores only. The Petroleum Planning and Analysis Cell (PPAC), an organization attached to Ministry of Petroleumand Natural Gas was formed replacing Oil Coordination Committee in 2012. PPAC had also confirmed in September 2018 that the government had indeedrepaid only ₹ 3,500 crore worth oil bonds. Even in Rajya Sabha, the government stated the same as a response to aquestion. What are oil bonds? What is its purpose? During the UPA and even during the Vajpayee government, the governments issued oil bonds instead of paying Oil Marketing Companies (OMCs) for subsidies extended on petrol, diesel and other oil products. These oil bonds were issued as compensation to these OMCs which are like government securities which are long-dated. The maturity period can extend for a period of 10 to 20 years. In short, in order to compensate for the losses incurred when the prices of petrol and diesel are regulated, oil bonds were issued by the government. For example, the following is a notification on oil bonds that were issued by the UPA government in 2008. Who issued oil bonds? Oil bonds were issued by all the governments until about 2010. Not only the UPA government but also the Atal Bihari Vajpayee led NDA government had also issued oil bonds. This is evident from the budget speech for 2002-03 of the then finance minister, Yashwant Sinha. Sinha had mentioned that the government would issue oil bonds. What is the worth of oil bonds pending? The details regarding pending oil bonds and the amount of interest to bepaid on the oil bonds are listed in the budget documents. In the 2014-15 receipt budget, as per annexure 6E titled ‘Special Securities Issuedto Oil Marketing Companies In Lieu Of Cash Subsidy’, pending liabilitiesrelated to oil bonds were ₹ 1,34,423 crores. That is, an amount of ₹ 1,34,423crores were the total value of pending oil bonds by the end of 2013-14. How much has the NDA government repaid? The NDA government came into power in May 2014. Between 2014-19, duringthe NDA regime, only two sets of bonds were due for maturity and these maturedin 2015 whose total value was ₹ 3500 crores. This was clarified by thegovernment in an answer in Rajya Sabha and also by the PPAC. Annexure 2E of receipt budget 2019-20 showed the same liabilities.