Oil and Natural Gas Corporation said on August 9 that it has received approval from the petroleum ministry for additional investment totalling Rs 18,365 crore in ONGC Petro additions Limited (OPaL).
This investment is split into additional equity capital of upto Rs 10,501 crore, conversion of back stopped Compulsorily Convertible Debentures (CCDs) amounting to Rs 7,778 crore and balance payment of Rs 86 crore with respect to share warrants, ONGC said in an exchange filing.
According to a press release issued later, ONGC’s stake in OPaL has increased from 49.36 percent to 95.69 percent, turning it into a subsidiary of ONGC.
"This significant move paves the way for capital restructuring leading to the operational and financial sustainability of OPaL," ONGC added. "The Government’s approval to increase ONGC’s equity stake in OPaL shall help in rectifying OPaL’s capital structure with a healthy Debt Equity ratio. With this infusion, ONGC’s cumulative investment in OPaL will stand to Rs 22,728 crore."
OPaL, situated at Dahej in Gujarat, is a petrochemical complex having the largest standalone dual feed cracker in South-East Asia. Commissioned in 2017, OPaL is a state-of-art petrochemical complex with capacity to produce 1.5 MMTPA of polymers and 0.5 MMTPA of chemicals. With 12 percent market share, OPaL has a good presence in India’s polymer segment.
The government has also permitted to allocate 50 percent of the annual gas production from new wells or well interventions in nomination fields of ONGC or upto 3.2 MMSCMD of domestic natural gas, whichever is lower, for providing feedstock support to OPaL, at a price up to 20 percent above APM price.
APM Price of natural gas per MMBTU is 10 percent of Indian Crude basket price per barrel of Oil.
OPaL is currently a joint venture between ONGC, GAIL (India) and Gujarat State Petroleum Corporation Limited (GSPC).
In November 2023, ONGC had said it plans to bring in an equity partner in OPaL by the financial year 2026-2027, after making the petrochemical company sustainable by FY25. It had also proposed to infuse Rs 18,365 crore in OPaL, bringing ONGC’s shareholding to 96 percent and making the petchem company its subsidiary. However, ONGC had then said it does not intend OPaL to be its subsidiary nor it plans to merge it with ONGC.
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