Oil PSUs Debt Shoots

November 23rd, 2011 by James

Oil PSUs Debt ShootsAn early compensation has been demanded from the Finance ministry by Petroleum minister Jaipal Reddy for PSU oil retailers who are selling fuel below costs and whose borrowings till September have touched a staggering Rs 130,000 crore because of under-recoveries.

Indian Oil Corporation, Bharat Petroleum Corporation Ltd, and Hindustan Petroleum Corporation Ltd were facing a crisis situation as per a senior oil ministry official.

From in.finance.yahoo.com:

The three firms had a combined borrowing of Rs 96,727 crore in the last fiscal.

“If their financial health deteriorates on account of the price under-recoveries, their ability to discharge their assigned task of supplying the entire country with petroleum products will suffer,” Reddy said.

The oil ministry official said, “The oil PSUs will soon find it difficult to get loans from Indian banks, let alone foreign banks. The companies were borrowing heavily to meet even working capital requirements as their selling price could not meet even operating expenses,” he said.

IOC’s debt-equity ratio as on March 31 stood at 0.95:1, that of BPCL at 1.35:1 and of HPCL at 1.99:1. This is likely to widen this fiscal with rising borrowings and is expected to put pressure on future investments in oil and gas exploration and petrochemical projects.

“They have an unprecedented level of borrowings of Rs 129,989 crore to meet the working capital and dollar requirements to pay for crude import,” the official said.

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