ONGC to sell OPaL stake to fund HPCL buy
New Delhi: State-owned Oil and Natural Gas Corp. Ltd (ONGC) may sell stake in its mega petrochemical project in Gujarat to fund acquisition of Hindustan Petroleum Corp. Ltd (HPCL), a senior official said.
ONGC had borrowed money from banks to buy government’s 51.11% stake in HPCL for Rs36,915 crore. “We traditionally have been a debt-free company and would like to return to that status as soon as possible. We have assets which can be monetised to payoff the debt,” he said.
ONGC holds 13.77% stake in nation’s biggest refiner Indian Oil Corp. (IOC), which at Friday’s trading price is worth close to Rs26,000 crore. It also holds 4.86% stake in gas utility GAIL India Ltd, which is worth over Rs3,600 crore.
“We will sell sales in IOC and GAIL only when the price is right. And it is not possible to sell all the shares in one go,” he said, adding that an alternative to it is selling stake in ONGC-Petro Additions Ltd (OPaL). OPaL’s 1.1 million tonnes capacity petrochem plant at Dahej in Gujarat was commissioned last year and has reached 100% capacity in February.
“We have invested Rs30,000 crore in the project and always had plans to sell a minimum of 26% stake in the project to a strategic investor,” the official said. “Now that the plant has come up well and stabilised, this is the time to monetise it.”
The official said several companies including some global giants have evinced interest in taking equity in the project. He however refused to name the firms due to commercial reasons.
Saudi and Kuwaiti firms are said to be interested in taking a stake in the project. The project was originally conceived in 2006 and has witnessed cost and time overruns. It was initially planned to be built at a cost of Rs12,440 crore but ended up with actual investment of Rs30,000 crore.
ONGC was originally supposed to keep just 26% stake while gas utility GAIL was to take 19%. 5% was to be taken by Gujarat State Petroleum Corp. (GSPC) and the remaining was to be sold to a strategic investor. But GAIL ended up paying for only 9% and GSPC for only 0.2%. The remaining cost was borne by ONGC.
The official said ONGC already has government approval to sell its shareholding in IOC and GAIL but the company is waiting for the right price to offload the shares. ONGC, which completed HPCL acquisition at the end of January, has been a zero-debt company and wants to retain that status.
The short-term loan it availed of has provision to pre-pay without any penalty. It will pre-pay the one-year tenure loan fro sale of one or more of its assets, he said.
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