Can you tell me about ONGC investing Rs.6,000 crore in its petrochemicals business?
Answer
Answer
ONGC plans to invest up to Rs.6,000 crore in its petrochemicals arm, ONGC Petro additions Ltd (OPAL) to boost its equity base. This would be by way of conversion of the compulsorily convertible debentures or CCDs that ONGC owns in OPAL. The conversion of these CCDs into equity would be worth Rs.6,000 crore. OPAL has set up a 1.1 MMTPA greenfield petrochemicals complex at the Dahej Special Economic Zone in Gujarat.
ONGC originally planned to induct SABIC of Saudi Arabia as a 26% equity partner in OPAL but the deal did not go through post which it opted to make OPAL its subsidiary. With quarterly net profits of Rs.119 crore, OPAL is clearly in need of further equity infusion and that is what ONGC is providing. OPAL was originally promoted by ONGC and GAIL and co-promoted by Gujarat State Petroleum Corp. Ltd (GSPC).
ONGC has the option of merging OPAL into itself and that is yet to be deliberated upon. Currently, ONGC owns 92% in OPAL and may look to raise its stake to 100% in OPAL. OPAL houses India’s largest greenfield single-location, dual-feed cracker unit set up at an investment of $4.5 billion. OPAL manufacturers polymers, a chemical compound that is used in products ranging from textiles to plastics. ONGC supplies the naphtha feedstock for OPAL.