ONGC To Sell Stake In Gujarat Petrochem Project To Fund HPCL Acquisition
State-owned Oil and Natural Gas Corporation Ltd. may sell stake in its mega petrochemical project in Gujarat to fund Hindustan Petroleum Corp Ltd. acquisition, a senior official said today.
“We have traditionally been a debt-free company and would like to return to that status as soon as possible. We have assets which can be monetised to payoff the debt,” he said.
ONGC holds 13.77 percent stake in the nation’s biggest refiner Indian Oil Corporation Ltd., which at today’s trading price is worth close to Rs 26,000 crore. It also holds 4.86 percent stake in gas utility GAIL India Ltd., which is worth over Rs 3,600 crore.
“We will sell stakes in IOC and GAIL only when the price is right. And it is not possible to sell all the shares in one go,” the official said, adding that an alternative to it is selling the stake in ONGC-Petro Additions Ltd. (OPaL).
OPaL’s 1.1 million tonne capacity petrochemical plant at Dahej in Gujarat was commissioned last year and has reached 100 percent capacity in February.
“We have invested Rs 30,000 crore in the project and always had plans to sell a minimum of 26 percent stake in the project to a strategic investor,” the official said. “Now that the plant has come up well and is stabilised, it is time to monetise it.”
The official said several companies including some global giants have evinced interest in taking equity in the project. He however refused to name the firms due to commercial reasons.
Saudi and Kuwaiti firms are said to be interested in taking a stake in the project.
The project was originally conceived in 2006 and has witnessed cost and time overruns. It was initially planned to be built at a cost of Rs 12,440 crore but ended up with actual investment of Rs 30,000 crore.
ONGC was originally supposed to keep just 26 percent stake while gas utility GAIL was to take 19 percent. Gujarat State Petroleum Corp. Ltd. was to take 5 percent stake, and the remaining was to be sold to a strategic investor.
But GAIL ended up paying for only 9 percent and GSPC for only 0.2 percent. The remaining cost was borne by ONGC.
The official said that ONGC already has the government’s approval to sell its shareholding in IOC and GAIL but the company is waiting for the right price to offload the shares.
ONGC, which completed HPCL acquisition at the end of January, has been a zero-debt company and wants to retain that status. The short-term loan it availed of has provision to pre-pay without any penalty.