Oil and Natural Gas Commission (ONGC) will bring in a strategic partner in ONGC Petro additions (OPaL) by FY27, after the State-run company infuses ₹18,365 crore in the Gujarat-based petrochemicals venture and make it profitable by FY25.

OPaL is a mega petrochemical complex, which is spread over 5 sq km, with a capacity to produce 14 lakh tonnes of polymers and 5 lakh tonnes of chemicals. The complex is located in Dahej.

In an investor call on Wednesday, ONGC Executive Director (Chief Business Development and Joint Ventures portfolio), Deb Adhikari, said, “OPaL is having some distorted capital structure. So, ONGC is trying to correct it. In that regard, the Ministry of Petroleum & Natural Gas had advised an expert committee to be constituted. As per the advice of the expert committee, which is headed by a former secretary of government of India, the (ONGC) board has submitted some recommendations. About ₹18,365-crore additional investment has to be done to correct its capital structure”.

Capital restructuring

Last week, ONGC said the company, vide letter ONGC/CS/SE/2023-24 dated September 1, 2023, made disclosure about approval of Board of Directors for “Sustainable Capital Restructuring” of OPaL, a Joint Venture (JV) of the company, for a capital infusion of ₹14,864.281 crore, subject to approval of shareholders and/ or Government of India, as the case may be.

“It is informed that the Board of Directors at its meeting held today (November 10) inter-alia accorded in–principle approval, to do a sustainable debt-equity ratio for OPaL, subject to approval of shareholders and/ or Government of India, as the case may be, for additional equity investment of ₹3,501 crore, over and above the aforesaid approval of ₹14,864.281 crore, making a total investment of ₹18,365.281 crore in OPaL,” it added.

Responding to an analyst query, Adhikari said that the exploration and production (E&P) giant is approaching the government for allowing it to use gas from new wells.

“So, we are requesting the ministry to consider our request as an exception because this plant is strategically very important for Gujarat as well as the country because it has already generated employment in that area of about two lakh workers and it has attracted investment in that Dahej PCPIR of about ₹1-lakh crore,” he added.

Elaborating on the plans for OPaL, he said strategically ONGC is trying to infuse some capital so that it becomes sustainable. In FY24, the firm is not expected to make any profits. However, once the approval from the Union Cabinet is taken for investments over ₹5,000 crore, the petrochemicals venture will be made profitable by FY25.

“After capital infusion, ONGC’s share will be around 96 per cent. We are expecting that by FY25, it will be turned around after infusion of capital and ensuring a sustainable feedstock for OPaL. By FY27, we will try to infuse a new equity partner. We would like to bring down ONGC’s equity by 50 per cent so that it remains a JV of ONGC only and not a subsidiary,” Adhikari explained.

Petrochem ventures

ONGC is also exploring two petrochemical ventures in two States, for which the Maharatna company plans to invest more than ₹1-lakh crore by 2028 or 2030, he added.

“We are focusing on increasing interest in oil to chemical business. We are exploring two large projects in two different States,” Adhikari added. 

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