ONGC Videsh receives loan agreement with DBS Bank and Bank of Baroda

India’s oil refinery mammoth ONGC arm, the overseas investment unit of the country’s top explorer has approved to get a loan segment worth Rs 420 million dollars from DBS Bank and Bank of Baroda for a tenure of five years.

The loan will foster the respective oil agency's financial assistance to cope with cash dearth. Moreover, the company was likely to issue bonds to raise funds and similarly, Venezuela provided relief by giving some oil in lieu of $600 million dividend dues.

ONGC Videsh’s free cash flow was down about 88% from a year earlier to 6.48 billion rupees [$78 million] in the financial year ended March 2023, as per LSEG data.

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The new loan is a refinancing of a $500 million loan it had received in 2019 for a project in Mozambique. A syndicated loan involves two or more lenders providing funds for a single loan to a borrower. As per provisional data, DBS Bank is committed to $300 million for a loan while the state-owned Bank of Baroda is providing a $120 million loan.

 

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The five-year loan is raised about 125 basis points above the corresponding benchmark secured overnight financing rate [SOFR]. With the current five-year SOFR of 3.66% ONGC arm is paying approximately 4.91% in interest on the loan.

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