IOC to retire Rs 1900 cr high-cost debt

Indian Oil Corporation plans to retire Rs 1,900 crore high-cost debt by the end of the month. It proposes to finance its entire Rs 4,500 capital expenditure through internal generation. The company also ruled out plans to immediately offload its stake in GAIL and Oil and Natural Gas Corporation.

IOC has also lined up plans to add 1,000 retail outlets at an estimated cost of Rs 1,350 crore. It has 9,138 retail outlets at present, in addition to the 2,165 IBP outlets. Marketing company IBP is proposed to be merged with IOC during the course of the year.

"We hope to increase the number of retail outlets to over 10,000 by the end of the year and will open 123 specialised outlets on the highways," IOC director marketing NG Kannan said. IOC opened 1,122 retail outlets last year.

IOC's dependence on foreign exchange borrowings is also increasing with the share of forex loans crossing 50 per cent of its total debt compared to 42 per cent at the end of the last financial year.

IOC has managed to significantly cut its borrowing cost due to the higher share of forex debt. The company plans to retire Rs 1,900 crore high cost loans by the end of the month and reduce its debt from over Rs 12,000 crore at the end of March to around Rs 10,000 crore.

The company has also drawn up plans to increase its size from $ 29 billion at present to $ 48 billion by 2011-12. IOC chairman MS Ramachandran said that an additional $ 7.5 billion will come from the company's core business while petrochemicals, gas and exploration and production will generate $ 3 billion each.

Another $ 4.5 billion is estimated to be generated from exports. IOC is also on the lookout for a medium sized E&P company and has submitted a proposal to the government.

The IOC board today approved a proposal to set up an office in Indonesia ahead of the deregulation of the sector next year.

The company is bidding for retail assets of an oil company in Thailand and also collaborating with the national oil company in Ghana for upgrading the retail outlets and infrastructure development.

Bids have been submitted in Sudan for laying a 1,400 crore pipeline in collaboration with L&T and in Nigeria for a refinery turnaround job.