BackONGC to invest ₹15,000 crore in OPaL to take majority control; GAIL to sit out as part of restructuring
ONGC currently holds 49.36 per cent stake in OPaL, which operates a mega petrochemical plant at Dahej in Gujarat. GAIL (India) Ltd has 49.21 per cent interest and Gujarat State Petrochemical Corp (GSPC) has the remaining 1.43 per cent, according to the report.
PremiumState-owned Oil and Natural Gas Corporation (ONGC) will invest ₹15,000 crore in ONGC Petro-additions Ltd (OPaL) as part of a financial restructuring exercise. The move will result in gas utility GAIL being edged out of the petrochemical firm, according to a report by news agency PTI.
ONGC currently holds 49.36 per cent stake in OPaL, which operates a mega petrochemical plant at Dahej in Gujarat. GAIL (India) Ltd has 49.21 per cent interest and Gujarat State Petrochemical Corp (GSPC) has the remaining 1.43 per cent, according to the report.
Last week, ONGC's board 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 ₹7,000 crore more equity, which will give it about 95 per cent stake, according to a regulatory filing by the refiner to the stock exchanges.
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 ₹86.281 crore at the rate of ₹0.25 per warrant," it said.
ONGC will also “buy-back compulsory convertible debentures (CCDs) of ₹7,778 crore." The CCDs issued by OPaL with the support of ONGC are presently held by financial institutions.
ONGC will also invest ₹7,000 crore in equity/quasi-equity security of OPaL, it said. Upon implementation, OPaL would become a subsidiary of ONGC, according to the filing. The total cost of acquisition is ₹14,864.281 crore.
In 2008, GAIL had picked up a stake in OPaL, which was then building the mega petrochemical complex at Dahej. However, the project faced major cost and time overruns and GAIL decided to restrict its equity contribution to the original ₹996.28 crore.
The plant, which at the time of conception was projected to cost ₹12,440 crore, was completed only in 2017 at a cost of about ₹30,000 crore. GAIL and GSPC will now together hold close to 5 per cent in OPaL after the financial restructuring.
ONGC had invested about ₹4,400 crore as equity and warrants in OPaL. As a Maharatna PSU, it is permitted to invest only up to ₹5,000 crore in a joint venture. OPaL's accumulated losses touched ₹13,000.3 crore on March 31, 2023, according to PTI.
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