State-owned Oil and Natural Gas Corp on Thursday said the talks to sell stake in long-delayed mega petrochemical plant at Dahej in Gujarat to Kuwait's Petrochemical Industries Company (PIC) remain inconclusive. PIC, a subsidiary of state-run Kuwait Petroleum Corp (KPC), was in talks to buy at least 26 percent stake in ONGC Petro-additions Ltd, the firm that is building the Rs 27,122 crore project. "Discussion had been held with PIC, Kuwait for equity participation in OPaL project up to APril 2015. However, no recent developments on this front have taken place for the last two months and the discussion remain inconclusive as of date," ONGC said in a regulatory filing. ONGC had in 2006 set up ONGC Petro-additions Ltd (OPaL) for building a mega petrochemical complex at Dahej in Gujarat. The plant was originally planned to come on stream by end 2012 but delays have led to two revisions in completion dates.
Officials said the plant was mechanically completed by April 2015 and one of the units commissioned in June. Other units will be sequentially commissioned and the entire plant would start operations by fourth quarter of 2015 calendar year. The 1.1 million tonnes plant was in 2006 estimated to cost Rs 12,440 crore.
But since then the project cost has been revised thrice - first to 15,870 crore in end 2008, then to Rs 19,535 crore in June 2010 and to Rs 21,396 crore in August 2012. The project cost has undergone further cost-escalation and completion cost is now estimated at Rs 27,122 crore. Of the additional cost, about Rs 3,192 crore is due to interest during construction and another Rs 1,592 crore on account of startup and commissioning expense.
Foreign exchange variation cost Rs 460 crore and another Rs 482 crore was due to change of project scope, they said. ONGC was originally envisaged to hold 26 percent in OPaL with state gas utility GAIL India Ltd picking up 19 percent and Gujarat State Petroleum Corp Ltd (GSPC) taking 5 percent. The remaining 50 percent was to either be given to a strategic investor or offered in an initial public offering.
But after the cost and time overrun, both GAIL and GSPC have decided to restrict their equity participation to the sum already paid. GAIL had paid Rs 995 crore for the 19 percent stake when total promoters' equity was pegged at Rs 5,865 crore. Similarly, GSPC had contributed Rs 29 crore.
After the cost overrun, promoter equity contribution is now being pegged at Rs 8,558 crore, resulting in trimming of equity stake of GAIL and GSPC. ONGC had already provided Rs 1,669 crore equity in OPaL. OPaL will produce polymers which was used in manufacture of packaging films besides products like milk jugs, detergent bottles, margarine tubs, garbage containers and water pipes.
It will also produce chemicals used for making plastics.
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