The payments to these two companies has been the best piece of news as they have been struggling to maintain their cash flow positions. MRPL, in fact, has been borrowing from banks at high interest rates and the OCC thought it fit to address the company's problems immediately.

IBP's dues from the OCC actually work out to a little over Rs 200 crore but only half the amount has been admissible. However, this inflow is welcome as the PSU has been in the midst of a liquidity crunch for a while now. It has also sought government approval to exit from the Numaligarh refinery where its 19 per cent stake is valued at Rs 173 crore.

The OCC has indicated that it will soon reimburse outstandings to Cochin Refineries and Madras Refineries which face the same cash flow problems relating to stand-alone refiners/marketeers. It is only after this that a review of the dues to the big three - IndianOil, Bharat Petroleum Corporation and Hindustan Petroleum Corporation - will be made.

The oil pool deficit is presently in the range of Rs 4,500 crore and is threatening to escalate at Rs 500 crore a month. The outstandings to IOC, which is the sole canalising agency for crude, is the largest at over Rs 2,500 crore. Reports have indicated that the deficit will touch an astronomical Rs 13,000 crore by March 2001.

Industry experts are however categoric that there is no way the government will issue bonds to the oil companies as was done in 1996-97 when the pool deficit literally shot through the roof. "Things are different now what with finance easily available at competitive rates. Lenders now need to examine a company's balance sheet and do not require a sovereign guarantee like a government bond," they say.

This has been best illustrated in the case of HPCL which recently went in for a Rs 500 crore bond issue at a competitive 10.05 per cent coupon rate. And though interest rates are beginning to firm up a little, other oil majors like IOC, ONGC and BPCL will never be hard-pressed to raise funds.Observers also believe that this time around, the Centre will not hesitate to raise prices of key products like diesel or LPG (liquefied petroleum gas) to keep the pool deficit in check. "A price hike in diesel is inevitable in the months to come and people are also gradually beginning to realise that gone are the days when subsidies were doled out generously," they say.

It is not as if the process of reforms has only been accompanied by bad news. In April 1998, decontrolled products like naphtha and furnace oilsaw a price slash which lasted a year.