Govts Oil Dues To Hpcl Set To Touch Rs 1,200cr

Outstanding borrowings from the Oil Coordination Committee (OCC) by Hindustan Petroleum Corp Ltd (HPCL) is expected to increase 85 per cent in the current financial year. The figure is likely to touch Rs 1,200 crore by March 1997 as against Rs 700 crore in March 1996. It now stands at Rs 1,000 crore, said C Ramulu, executive director, corporate finance, HPCL, adding that OCCs total outstanding borrowings is expected to touch Rs 15,000 crore.

The high level of borrowings in the oil sector has been attributed to the following factors:

Following the firming up of crude prices in the international market, petroleum products prices firmed up, leading to a significant increase in the outflow of foreign exchange.

 

Production of crude output by the Oil and Natural Gas Commission declined to 30 million tonnes this year.

The rupee weakened slightly against the dollar.

The interest cost of borrowing went up significantly.

Indian Oil Corporation, the countrys largest oil major, has the highest amount of outstanding borrowing from OCC. It is followed by HPCL and Bharat Petroleum. Madras Refinery and Cochin Refinery have also borrowed from OCC to some extent.

HPCLs warrants conversion issue, which is slated to hit the market on February 24, has some unique options which make it similar to a rights issue. These are:

The option to apply for additional shares.

The choice to convert warrants in part and renounce the balance in favour of any one renouncee or more than one renouncee and

Renunciation of entitlement.

The Union governments equity in OCC will drop to 51 per cent after the conversion from the present 55.3 per cent.

Financial institutions, banks and mutual funds currently own 29.4 per cent, foreign institutional investors and non-resident Indians 5.7 per cent and employees 2.3 per cent while others hold 7.3 per cent.