ONGC Videsh, the overseas investment arm of India’s leading explorer, Oil and Natural Gas Corp, has successfully secured a five-year loan of $420 million from DBS Bank and Bank of Baroda, as confirmed by a company spokesperson on Thursday.
This financial infusion will bolster ONGC Videsh’s available cash, addressing challenges posed by a decline in free cash. Last month, merchant bankers had suggested the possibility of the company issuing bonds to raise funds. In January, Venezuela provided relief by agreeing to compensate ONGC Videsh with oil in lieu of $600 million in dividend dues.
ONGC Videsh’s free cash flow witnessed an 88% decline from the previous year, amounting to 6.48 billion rupees ($78 million) in the fiscal year ending March 2023, as reported by LSEG data.
The newly acquired $420 million loan serves as a refinancing of a $500 million loan obtained in 2019 for a project in Mozambique, according to the company spokesperson.
DBS Bank, a unit of Singapore’s DBS Group Holdings, is leading the syndicated transaction guaranteed by ONGC. The syndicated loan structure involves multiple lenders, and DBS Bank is committing $300 million, while the Indian state-owned Bank of Baroda is providing $120 million, as confirmed by spokespersons for both ONGC Videsh and DBS Bank.