New Delhi, June 12: The petroleum ministry has pinned down Videocon over a Rs 990 crore loan that the company has raised through the IDBI by pledging the entire eastern offshore Ravva oilfields as security even though it had only a 25 per cent stake in the field.
Sources say Videocon has now agreed to start returning around Rs 30 crore every month from the sales proceeds from its share of oil so that the major chunk of the loan is cleared at the earliest.
Recovering this money will not be difficult as the Ravva crude is bought by the national oil companies and payments to the company can be withheld till the loan amount is settled. The crude is currently being supplied to Bongaigaon Refineries and Petrochemicals Ltd.
Interestingly, the petroleum ministry has also highlighted the fact that Videocon diverted part of this loan for some of its other businesses.
Videocon has in fact managed to wriggle out of a very messy situation as the petroleum ministry had threatened to toss the company out of the ONGC-discovered oilfield. This would have deprived the private sector company of the lucrative flow of earnings from the mid-sized field.
Videocon has issued debentures worth Rs 990 crore to financial institutions and the revenue flow from the Ravva oilfield has been pledged as security. The security is being held in trust with IDBI to ensure the rights of the debenture holders.
The petroleum ministry had taken strong exception to the fact that although Videocon had only a 25 per cent share in the oilfield, on the basis of a production sharing contract signed in 1994, it had exposed the entire oilfield to financial risk. ONGC still owns 40 per cent of the oilfield. Cairn Energy of the UK owns 22.5 per cent and Marubeni Corporation the remaining 12.5 per cent.
The ministry had issued Videocon (now called Petrocon for the Ravva operations) a notice for terminating the contract if it did not make amends. The ministry had also threatened to “recover damages under the provisions of the Indian Contract Act”.
Initially, Videocon is reported to have gone in for some tough posturing and talked of going in for arbitration. However, the weak nature of its case and the high stakes involved reportedly forced it to fall in line.
Videocon and its partners Cairn and Marubeni have also refused to pay another Rs 1000 crore by way of “profit petroleum” to the government.
The hastily drawn up contract in 1994, when Satish Sharma was the petroleum minister, appears to have left some loopholes which these companies are trying to exploit. As a result, the case has been referred to arbritration proceedings.