BPCL and IOC salaries at risk as money dries up

Vol 23, PW 12 (23 Apr 20) Midstream & Downstream
     

IndianOil and Bharat Petroleum employees fear a dangerous cashflow crisis in their parent organisations because of the Coronavirus lockdown could force them to take a 30% pay cut, despite a labour ministry directive on March 21 not to reduce salaries or wages.

"Our company does not have enough working capital (for daily trading operations)," reports a BPCL source. "This is due to severe losses because of no sales of petrol, diesel or jet fuel."

He expects employees to take a hit from May. "We hear it is likely we might have to take a cut of 30% in our salaries," adds our source.

"Not just for May but the rest of the year also." Refineries, he explains, are running at low capacity because of negligible fuel product sales.

"Our Mumbai refinery (in Trombay) is running at around 40% capacity," he says. "All our storage tanks for petrol, diesel and crude are full."

BPCL, he adds, is already diverting some crude to Mangalore for storage in caverns and is looking for ways to generate cash flow by exporting diesel to Bangladesh or taking out new loans from banks. "BPCL tried to get a Rs50cr ($6.5m) loan for its working capital," we hear.

"Even though the RBI has slashed repo rates and CRR (a measure of liquidity available to banks), the banks are not cutting interest rates (on loans to companies)."