State-owned ONGC has refused to accept payments for its crude oil sales to the three oil marketing and refining firms ?Indian Oil, HPCL and BPCL?as oil bonds.
Instead, ONGC has offered to lend its surpluses of Rs 17,000 crore to bail out the these oil PSUs, currently reeling under severe liquidity crisis on account of global crude oil prices touching $137 a barrel. Indian Oil Corporation chairman Sarthak Behuria and HPCL chairman Arun Balakrishnan have already offered to pay their crude suppliers ONGC and OIL in oil bonds.
?We cannot have a parallel currency (by way of oil bonds) for accepting payments for crude oil sales. I will fight it tooth and nail to see that ONGC does not have to accept oil bonds in lieu of payments for its crude oil sales to oil refiners. ONGC is a listed company and there are corporate governance issues involved. Investors can sue us for such a move,? said the chairman and managing director ONGC, R S Sharma.
However, Sharma said that ONGC was ready to extend help to its sister oil PSUs by parking its surplus funds with them at commercial rates. ONGC has currently invested its surpluses with the PSU banks at 9-10%. ?If the government gets us a dispensation in the DPE guidelines, we can offer our funds to the oil marketing companies,? Sharma said. Another senior ONGC official said, ?Will the government accept the payments of cess, royalty and taxes in oil bonds. On a lighter note, I would like to add that tomorrow if there is a proposal to disburse salaries in oil bonds, will they be accepted. It can’t be as oil bond is a paper.? ONGC said it is already extending a huge support in the form of upstream assistance to the oil marketing companies. ?For 2007-08, the finance ministry has refused to accept the calculations on under-recoveries of the OMCs at Rs 77,300 crore and has instead used the figure of Rs 70,600 crore for calculating the amount of oil bonds to be issued. ONGC is still contributing its one-third share of under-recoveries at Rs 77,300 crore. But we still agreed,? the ONGC official said.
On the liquidity issue, HPCL has already told the petroleum ministry that its current borrowings have already reached the level of Rs 17,400 crore against the total limits of Rs 21,500 crore available with banks. At the current level of prices of crude & its products, HPCL said it would exhaust its borrowing limits in around 45 days. IOC, too, will shortly seek its shareholders approval to double its borrowings limit from the existing Rs 40,000 crore to Rs 80,000 crore.