Slowdown Blues: Indian Oil, BPCL, HPCL's total debt rises to 5-year high of Rs 1.62 lakh crore in FY19

State-owned oil marketing companies are reeling under combined consolidated debt of over Rs 1.62 lakh crore, a five-year high since 2014. The overall debt of the companies, including Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited ( HPCL), has risen 30 per cent in FY19 from Rs 1.25 lakh crore in the previous fiscal, reported Business Standard. However, the combined liabilities of these three OMCs are still less than their 2014 debt of Rs 1.76 lakh crore when crude oil touched $100 per barrel.

India's one of the biggest state-owned oil companies, Indian Oil, reported the highest debt of Rs 92,712 crore. The total debt of BPCL and HPCL stood at Rs 42,915 crore and Rs 26,036 crore, respectively. In the financial year 2018-19 alone, all the three companies added the total debt of Rs 36,402 crore.

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Major reasons for an increase in the overall debt include higher capital expenditure and a delay in the subsidy payments by the government. The reported claimed the Centre, in order to maintain the fiscal balance, has not cleared the subsidy payments worth Rs 33,900 crore for petroleum products like LPG (Liquefied Petroleum Gas) and kerosene in the fiscal year.

The overall debt increased by Rs 5,000 crore to Rs 10,000 crore in the fourth quarter of FY 19 due to the subsidy payment delay by the government, a Bank of Baroda Capital report claims.

For example, Indian Oil's total debt comprised subsidy payments of Rs 13,883 crore on LPG subsidy and Rs 3,395 crore on kerosene and rest from Pradhan Mantri Ujjwala Yojana deposits, the daily quoted Indian Oil Director (finance) AK Sharma as saying.  Other factors that helped the Indian Oil debt's rise are higher dividend payment to the centre, arrears, and entry tax for Mathura Refinery.

The pending subsidy payments usually create working capital issues for the oil marketing companies, which buy most of their oil from overseas. The devaluation of the domestic currency between FY18 and FY19 by Rs 5.02 and the rising of the crude oil benchmark by 18 per cent during that period also added to the companies' debt pile.

Edited by Manoj Sharma

Oil India Ltd reports Q4 net loss of Rs 208.54 crore