The Hindu Business Line : Govt to hike IOC's working capital credit limit

NEW DELHI: In a bid to ease liquidity crunch of Indian Oil Corp, the Finance Ministry has agreed to raise its working capital credit limit by Rs 20,000 crore to Rs 65,000 crore.

“We yesterday received approval of the Finance Ministry,” said Mr S Sunderasan, Additional Secretary in the Ministry of Petroleum and Natural Gas here. The Petroleum Ministry had asked Finance Ministry to exclude Rs 20,000 crore committed for lending to the company's Paradip refinery project from the permissible single borrowers limit of 25-20 per cent of their capital funds.

“IOC will have Rs 65,000 crore borrowing limit to meet its working capital requirement instead of present case of Rs 45,000 crore for working capital and Rs 20,000 crore loan limit for Paradip refinery,” he said, adding IOC had virtually exhausted its li mit.

The move would ease liquidity crunch faced by the company on account of having being forced to sell fuel below cost of production. IOC loses Rs 329 crore a day on sale of petrol, diesel, domestic LPG and kerosene.

The Petroleum Ministry had written to the Finance Ministry soliciting an immediate enhancement of the credit limit of IOC, Bharat Petroleum and Hindustan Petroleum as they were in danger of exceeding their permissible limits for borrowings.

While HPCL has sought an additional credit limit of Rs 2,500 crore over the present limit of Rs 20,700 crore, BPCL has asked for Rs 3,000 crore more through enhancement of the present limit of Rs 22,500 crore to Rs 25,500 crore.

“We hope a decision on HPCL and BPCL will also be taken soon. This will give oil companies liquidity to import crude till September-end by when Government is likely to issue oil bonds for the previous two quarters,” he said. - PTI

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