New Delhi: State-owned Oil and Natural Gas Corporation (ONGC) will infuse about INR 15,000 crore in OPaL as part of a financial restructuring exercise that will see gas utility GAIL being edged out of the petrochemical firm. ONGC currently holds 49.36% stake in ONGC Petro-additions Ltd (OPaL), which operates a mega petrochemical plant at Dahej in Gujarat. GAIL (India) Ltd has 49.21% interest and Gujarat State Petrochemical Corp (GSPC) has the remaining 1.43%.
The ONGC board last week approved a financial restructuring of the petchem firm which had been making losses due to its high debt.
ONGC will convert share warrants into equity, buy-back debentures and invest INR 7,000 crore more equity, which will give it about 95% stake, the company said in a stock exchange filing.
The proposal approved includes “conversion of share warrants issued by OPaL and subscribed by ONGC into equity shares upon payment of final call money of INR 86.281 crore at the rate of INR 0.25 per warrant,” it said.
Also, ONGC will “buy-back compulsory convertible debentures (CCDs) of INR 7,778 crore.”
CCDs issued by OPaL with backstopping support of ONGC are presently held by financial institutions.
ONGC will also invest INR 7,000 crore in equity/quasi-equity security of OPaL, it said.
Upon implementation, OPaL would become a subsidiary of ONGC, it added.
The financial restructuring “will augment the holding of ONGC in OPaL and OPaL will become more profitable,” it said, adding that the total cost of acquisition would be INR 14,864.281 crore.
OPaL was incorporated on November 15, 2006, as a mega, grassroots petrochemical complex to use naphtha produced by ONGC at Hazira as well as rich-gas being imported at Dahej.
It is an anchor tenant of Dahej PCPIR, Gujarat and has exported its products to more than 50 countries.
OPaL mega petrochemical complex has a capacity to produce 1.5 million tonne per annum of polymers (1,100 kilo tonne per annum (KTPA) ethylene, 400 KTPA propylene), 0.5 million tonne of chemicals, and several other products through the associated units of pyrolysis gasoline hydrogenation unit, butadiene extraction unit and benzene extraction unit.
GAIL had in 2008 picked up a stake in OPaL, which was then building the mega petrochemical complex at Dahej. But the project faced major cost and time overruns and GAIL decided to restrict its equity contribution to the original INR 996.28 crore.
The plant, which at the time of conception was projected to cost INR 12,440 crore, was completed only in 2017 at a cost of about INR 30,000 crore.
GAIL and GSPC will now together hold close to 5% in OPaL post-financial restructuring.
ONGC had invested about INR 4,400 crore as equity and warrants in OPaL. As a Maharatna PSU, it is permitted to invest only up to INR 5,000 crore in a joint venture.
OPaL’s accumulated losses touched INR 13,000.3 crore on March 31, 2023.
