Mumbai: State-run Oil and Natural Gas Corp. Ltd (ONGC) plans to raise Rs1,671 crore for its associate company, ONGC Petro additions Ltd (OPaL), two officials aware of the development said.
ONGC holds 49.36%, GAIL (India) Ltd 49.21% and Gujarat State Petroleum Corporation (GSPC) 1.43% stake in OPaL, as of March 2016.
“By next month we would be infusing equity in OPaL to the extent of Rs1,671 crore which we plan to raise through private placements of compulsory convertible debentures,” the first ONGC official said on condition of anonymity.
ONGC did not respond to an email sent Thursday.
OPaL operates a $4.5 billion mega petrochemicals complex in the Dahej special economic zone (SEZ) in Gujarat. The complex was inaugurated by Prime Minister Narendra Modi on 7 March after much delay and cost overruns.
The plant will annually produce 1.4 million tonnes of polymers such as linear low density polyethylene and high density polyethylene, polypropylene and 500,000 tonnes of chemicals like benzene, butadiene and pyrolysis gasoline, among other products.
ONGC, GAIL (India) and GSPC also plan to bring private partners into the company.
Talks are on with Kuwait-based energy company PIC, an arm of Kuwait Petroleum Corp., for a stake sale in OPaL, chief executive K. Satyanarayana was quoted as saying at the inauguration on 7 March.
“We are ready to offer as much as 40% to the new partner. However, the talks have been on for about 1.5 years but nothing has been finalised as yet,” Business Standard quoted him as saying at the inauguration of OPaL’s Dahej SEZ plant.
Confirming this, the second ONGC official said on condition of anonymity, “We envisage to have a non-public sector unit structure for OPaL. We want that ONGC, Gail and GSPC would subscribe up to 50% equity with the rest to be tied up through a mix of strategic or private equity investors and public issue to keep OPaL as a private sector entity.”
Mint reported in June that OPaL was in talks with local and overseas petrochemical companies to sell stake in the company.
According to OPaL’s filings with the Registrar of Companies, it raised Rs5,615 crore last year through compulsory convertible debentures for part financing capital expenditure and repayment of debt to banks and financial institutions. ICICI Bank participated in the offer.
As per a shareholders’ resolution dated 16 March 2016, the authorised share capital of OPaL was increased from Rs8,000 crore to Rs 15,000 crore, according to the filings.
“The petrochemical plant at Dahej is running now and, at full capacity, we expect it to generate a revenue of Rs16,000 crore per annum. We expect that the strategic stakeholders we are looking for will find OPaL as an attractive bet to invest in,” added the first ONGC official quoted above.