India increases ECB limits of oil sector companies

The Indian Finance Ministry has decided to raise the external commercial borrowings (ECBs) limits of state-owned Indian Oil Corporation (IOC) and private sector players such as Reliance Petroleum (RPL), Essar Oil and Mangalore Refinery and Petrochemicals (MRPL).
For IOC the ECB limit has been fixed at $ 3.4 bn -up from $ 2.9 bn. It was felt that the ECB limit of IOC had to be raised since it was last increased to $ 2.9 bn in 1997 from when the prices of crude and volumes have increased significantly in the international market.
IOC is the sole importer of crude in India and its fund requirements had to be increased for import purposes. IOC has a special dispensation with the Finance Ministry and the Reserve Bank of India with regard to fixing of an annual ceiling for the State-owned Company's overseas borrowing needs. IOC's major chunk of borrowings have been in the form of a 180-day credit which is sometimes rolled over.

The Finance Ministry had sought an assessment from the ministry ofpetroleum and natural gas about the fund requirements of oil companies both state owned and private sector refiners such as Reliance Petroleum (RPL), Essar Oil and Mangalore Refinery and Petrochemicals (MRPL).
The petroleum ministry had also fixed the ECB limits for private and joint sector companies at $ 2.5 bn. Among the private sector refineries, although the Reliance group was a prominent borrower in the international loan and bond markets, it has been absent from these markets for a long period.