The refinerys funded debt portfolio exceeds Rs 5,000 crore and the company has accumulated losses close to Rs 1,000 crore. Top industrial sources told FE that following delays in implementation of the restructuring package, the management had recently approached the Board for Industrial and Financial Restructuring (BIFR) and informed them about the erosion of more than 50 per cent of the companys peak net worth, due to huge accumulated losses.
Banking and insurance secretary Vineeta Rai had, in a recent letter to petroleum secretary BK Chaturvedi, informed him about the state of affairs at MRPL.
According to her, "any delay in decision on recast would have implications for financial institutions and banks, as their exposure to the company may become a non-performing asset thereby forcing them to make provisions". Major lenders including ICICI, SBI and IDBI had recently shot off missives to finance ministry expressing this apprehensions on this front.
Under the debt-restructuring package worked out by lenders, Oil and Natural Gas Corporation (ONGC) would infuse Rs 600 crore in the form of equity in the refinery and hold a majority stake of 51 per cent. But the implementation of this package is contingent upon Public Investment Board (PIB) clearing the Corporations deal with Birlas.
ONGC had executed a share purchase agreement with the Aditya Birla group in August 2002 wherein it had agreed to buy the latters 37.39 per cent equity in MRPL at Rs 2 per share aggregating Rs 59.43 crore.
Petroleum minister Ram Naik has already written to finance minister Jaswant Singh seeking clearance of the deal without going through the PIB route. The bureau is slated to consider this proposal on Wednesday.
According to petroleum ministry officials, the delay has not been from their side as it is the department of expenditure itself which is insisting on a PIB approval. But, they say, the PIB route does not apply to ONGC investment of Rs 59.40 crore in MRPL, which is way below the mandatory Rs 200-crore mark.
According to them, ONGC is not establishing a new joint venture but an equity investment in an existing joint venture, which lies within the delegated powers of the navaratna board. ONGC board, which has representations from the government, had cleared this proposal after detailed financial, technical and legal approvals and so now there is no need for any further project appraisal, they say.