The Oil and Natural Gas Corporation (ONGC) has received approval from the Government of India to significantly increase its stake in its petrochemicals subsidiary, ONGC Petro-additions Limited (OPaL), from 49.36% to 95.69%. This strategic move, announced by ONGC in a statement on Friday, involves an additional investment of Rs 18,365 crore.
The infusion of capital is expected to pave the way for capital restructuring, thereby enhancing the operational and financial stability of OPaL. “This significant move paves the way for capital restructuring, leading to the operational and financial sustainability of OPaL,” ONGC stated.
With this investment, ONGC’s cumulative stake in OPaL will rise to Rs 22,728 crore, significantly improving the company’s equity position. The approval is also set to rectify OPaL’s capital structure, ensuring a healthier debt-equity ratio, which is crucial for the company’s long-term sustainability.
Furthermore, the government’s approval guarantees a continued supply of gaseous feedstock to OPaL from ONGC’s new nomination fields. This supply will be provided at a premium of up to 20% over the APM (Administered Pricing Mechanism) gas price, further supporting OPaL’s operations.
“The decision aligns with ONGC’s strategic vision to become an integrated global energy major by increasing its presence across the downstream and petrochemical value chains as well,” ONGC added.
OPaL, located at Dahej in Gujarat, is a state-of-the-art petrochemical complex that was commissioned in 2017. It houses Southeast Asia’s largest standalone dual feed cracker, with the capacity to produce 1.5 million metric tons per annum (MMTPA) of polymers and 0.5 MMTPA of chemicals. With a 12% market share, OPaL holds a strong position in India’s polymer market.
