IGI Logo

India's ONGC Videsh, the overseas investment unit of the country's top explorer, Oil and Natural Gas Corp, has received a five-year $420 million loan from DBS Bank and Bank of Baroda, a company spokesperson said on Thursday.

The loan will strengthen ONGC Videsh's available cash as it contends with shrinking free cash.

Merchant bankers said last month that the company was likely to issue bonds to raise funds, and Venezuela provided some respite in January by agreeing to give ONGC Videsh 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.

The new loan is a refinancing of a $500 million loan it had received in 2019 for a project in Mozambique, the spokesperson told Reuters.

DBS Bank, a unit of Singapore's DBS Group Holdings, is leading the syndicated transaction guaranteed by ONGC, spokespersons for both ONGC Videsh and DBS Bank told Reuters.

A syndicated loan involves two or more lenders providing funds for a single loan to a borrower. DBS Bank is committing $300 million for loan while the Indian state-owned Bank of Baroda is providing $120 million, the spokespersons said.

Bank of Baroda did not immediately respond to a Reuters request for comment.

The news was first reported by the Economic Times.

($1 = 83.1310 Indian rupees)