The state-owned Oil and Natural Gas Corporation (ONGC) has unveiled a significant financial restructuring plan for its subsidiary, ONGC Petro-additions Ltd (OPaL), involving an infusion of approximately Rs 15,000 crore.
The move is poised to reshape the ownership structure, resulting in gas utility GAIL (India) Ltd being edged out of the petrochemical firm. Presently, ONGC holds a 49.36 per cent stake in OPaL, while GAIL (India) Ltd and Gujarat State Petrochemical Corp (GSPC) own 49.21 per cent and 1.43 per cent respectively.
The restructuring strategy, approved by the ONGC board last week, encompasses several key components. ONGC will convert share warrants into equity, culminating in an increased stake of approximately 95 per cent in OPaL. Additionally, the company plans to buy back compulsory convertible debentures (CCDs) worth Rs 7,778 crore, currently held by financial institutions. A further infusion of Rs 7,000 crore in equity/quasi-equity security of OPaL is also in the offing.
Upon completion of these measures, OPaL will be reconstituted as a subsidiary of ONGC. The financial overhaul is projected to bolster OPaL’s profitability. The total cost of acquisition for ONGC in OPaL will amount to Rs 14,864.281 crore.
Established in 2006, OPaL is a mega petrochemical complex with the capacity to produce 1.5 million tonnes per annum of polymers, 0.5 million tonnes of chemicals, and various other products through associated units. The company is an anchor tenant of Dahej PCPIR in Gujarat and has exported its products to over 50 countries.
GAIL had initially invested in OPaL in 2008 during the construction of the petrochemical complex at Dahej. However, the project encountered substantial cost and time overruns, leading GAIL to limit its equity contribution. Originally projected at Rs 12,440 crore, the project’s completion in 2017 incurred a cost of approximately Rs 30,000 crore.
Following the restructuring, GAIL and GSPC will collectively retain about 5 percent stake in OPaL.