Public Sector Oil and Natural Gas Corporation Limited (ONGC) will invest up to 6,000 crore to meet its equity requirements in petrochemicals arm ONGC Petro Additions Ltd (OPAL), a top executive said.
“We have already got compulsorily convertible debentures (CCDs) in OPaL. we will convert them into equity worth 6,000 crore,” said Vivek Tongonkar, chief financial officer of ONGC.
OPaL’s net profit during the second quarter was 1.19 billion. The company is a joint venture promoted by ONGC and GAIL (India) Limited, and co-promoted by Gujarat State Petroleum Corporation Limited (GSPC).
OPaL has set up a 1.1-MMTPA (Million Metric Tonnes Per Annum) Greenfield Petrochemicals Complex at Dahej SEZ in Gujarat.
ONGC had been planning to induct a strategic partner in OPAL for several years, but the plans were shelved due to lack of investor interest.
As of 2019, ONGC was in talks with Saudi Arabia’s Saudi Basic Industries Corp (Subic) and Saudi Aramco to sell a 26% stake in OPaL.
The stake sale process did not proceed; Hence, ONGC decided to make Opel a subsidiary. The company is now planning to merge OPaL with itself.
“The merger of Opel with ONGC is an option and discussions are on,” Tongonkar said.
As of December 2020, ONGC had infused capital in the form of warrants ( 3,365 crore) and provided assistance for CCD ( 7,778 crore), taking ONGC’s stake in OPaL to 92%, the company is planning to further increase its equity stake in OPaL.
OPaL, which has a $4.5 billion petrochemical project, began operations in 2016-17 and is ramping up production in phases. OPaL’s complex houses India’s largest greenfield single-location, dual-feed cracker unit. The company primarily manufactures polymers, a chemical compound used in a variety of products ranging from textiles to plastics.
OPAL’s petrochemicals complex is part of ONGC’s further integration plans.
Majority of the feedstock for OPaL is currently being sourced from ONGC. Naphtha requirement is met by ONGC’s processing plants at Hazira and Uran.
“Given the increasing demand for petrochemicals, we see the contribution from petrochemicals to increase (in ONGC’s topline). We may eventually integrate OPaL into ONGC. However this is under process,” said an ONGC official.
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