Special Correspondent

Reports of default on external commercial borrowing obligations by BPCL incorrect

NEW DELHI: There is no liquidity problem with oil companies. It is not true that oil companies are facing problems getting loans from banks. The only issue is the cost of borrowing that has gone up, Petroleum Secretary R. S. Pandey said here on Thursday.

Dispelling rumours about any kind of financial crisis being faced by Bharat Petroleum Corporation Limited (BPCL), Mr. Pandey asserted that BPCL did not face any liquidity problem and would not default on any of its financial obligations.

“None of the public sector oil companies, including BPCL, are facing any kind of liquidity problem,” Mr. Pandey told newsmen here.

The Petroleum Secretary said BPCL had informed him that the reports of default on its obligations in respect of its external commercial borrowings (ECB) were incorrect. “BPCL has informed that out of the current ECB level of $300 million, around $100 million is due for repayment in October 2009 and the balance in March 2012,” Mr. Pandey said.

Mr. Pandey said the company had a good financial track record and had not at any point of time defaulted on any of its borrowing obligations and other financial commitments.

Also the fall in international crude oil prices and the recent announcement of Reserve Bank of India (RBI) of its plans to recommence the special market operations (SMO) for buying oil bonds from public sector oil retailing firms, would provide ample liquidity to meet any financial obligation, BPCL had informed the Petroleum Ministry. ``I categorically state that there is no liquidity problem with oil companies. It is not true that oil companies are facing problems getting loans from banks. The only issue is the cost of borrowing that has gone up,” Mr. Pandey said.

Mr. Pandey said the fuel retailers would be compensated for about half of their revenue losses on fuel sales during January to June through the issue of oil bonds before the month-end.

“The Parliament session is commencing on Friday and we are hopeful it will pass supplementary demands that will enable us to issue of oil bonds,” he stated.