As part of a financial restructuring initiative, the state-owned Oil and Natural Gas Corporation (ONGC) will invest around Rs 15,000 crore in OPaL, pushing the gas utility GAIL out of the petrochemical company. In ONGC Petro-additions Ltd (OPaL), which runs a massive petrochemical factory in Dahej, Gujarat, ONGC now owns a 49.36 percent ownership. Gujarat State Petrochemical Corp (GSPC) owns the final 1.43 percent, leaving GAIL (India) Ltd with a 49.21 percent stake. The petchem company, which had been losing money because of its enormous debt, had last week received board approval from ONGC to restructure its finances.
ONGC will convert share warrants into equity, buy back debentures and invest Rs 7,000 crore more equity, which will give it about 95 percent 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 Rs 86.281 crore at the rate of Rs 0.25 per warrant," it said. Also, ONGC will "buy back compulsory convertible debentures (CCDs) of Rs 7,778 crore." CCDs issued by OPaL with backstopping support of ONGC are presently held by financial institutions. ONGC will also invest Rs 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 Rs 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 the capacity to produce 1.5 million tonnes 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 Rs 996.28 crore. The plant, which at the time of conception was projected to cost Rs 12,440 crore, was completed only in 2017 at a cost of about Rs 30,000 crore. GAIL and GSPC will now together hold close to 5 percent in OPaL post-financial restructuring. ONGC had invested about Rs 4,400 crore as equity and warrants in OPaL. As a Maharatna PSU, it is permitted to invest only up to Rs 5,000 crore in a joint venture.
