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Informist, Tuesday, May 12, 2026

--Dealers: HPCL raises INR 5 bln via 3-month CP at 6.78% 
--Dealers: IOC raises INR 17 bln via 1-month CP at 6.26% 

--ONGC Petro raises INR 4 bln via CP maturing on Aug 10 at 6.93% 

 

By Vaishali Tyagi 

 

NEW DELHI – State-owned oil marketing companies are increasingly tapping the short-term debt market to manage liquidity stress as crude oil prices stay above $100 per barrel, with no respite from the West Asia crisis in sight, dealers said. Brent crude for delivery in July was over $107.88 per barrel at 2038 IST, up 3.5% from $104.21 per barrel at the same time Monday.

 

On Tuesday, Hindustan Petroleum Corp. raised INR 5 billion through a three-month commercial paper at 6.78%, while Indian Oil Corp. Ltd. mopped up INR 17 billion through a one-month CP at 6.26%, dealers said. ONGC Petro Additions Ltd. raised INR 4 billion through a CP maturing on Aug. 10 at 6.93%, according to data available on Clearing Corp of India Ltd.

 

The borrowing spree comes as oil marketing companies face a margin crunch. The government has taken several steps to cushion the impact of the war, including slashing excise duty on petrol to INR 3 per litre from INR 13 per litre, and on diesel to zero from INR 10 per litre, to help oil marketing companies absorb rising crude prices.

 

In April, oil and gas companies raised INR 110.5 billion through CPs as crude oil prices were sharply higher due to the war in West Asia. Hindustan Petroleum Corp. raised INR 45.5 billion through three different CPs and Bharat Petroleum Corp. raised INR 30 billion. 

 

On Monday, Informist reported, citing a senior oil ministry official, that state-owned oil companies were bearing the brunt of the energy crisis to ensure uninterrupted imports and supply. This may lead to their Apr-Jun losses expanding to INR 1 trillion to INR 1.20 trillion.

 

"OMCs might wait for government confirmation about the (petrol and diesel) rates," a dealer at a private sector bank said. "There are chances that they will cancel or postpone the issuances if any decision comes from government on rates."

 

Market participants said OMCs prefer short-term tools like CPs for now, given volatile yields and uncertainty on retail fuel pricing. "It depends company to company and if they need funds they may come for CPs... given high yields on bonds and on top of that they want corporate bond yields to stabilise even more... post that visibility of OMCs is possible," a dealer at a brokerage firm said. "But to comment that they will shortly tap the bond market... ultra short like CP-CDs have higher probability," he said, adding that OMCs have earlier also raised funds through CPs or short-term debt. "Even if oil prices are up, they would want government to take some measure. Fund raising is later." 

 

In the secondary market, 'AAA'-rated CPs were traded 10 basis points higher across tenures. Three-month CPs were dealt at 6.75-6.80%, six-month at 7.10-7.15%, and one-year papers at 7.35%.
 

Still, some market participants are not ruling out longer-term borrowing if the crude prices goes up. "However, a few market participants don't rule out that oil marketing companies will not tap bond market... It's possible. Won't rule it out," a fund manager at a mutual fund house said. 

 

For now, with crude holding above $100 per barrel and retail fuel prices frozen, OMCs appear to be plugging immediate cash needs through CPs while awaiting clarity on government support.  End

 

With inputs from Meera Nair and J. Navya Sruthi

Edited by Avishek Dutta

 

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