MOSCOW (MRC) -- ONGC Petro additions Ltd (OPaL) is in talks with local and overseas petrochemical companies to sell as much as 25% in the company, three Oil and Natural Gas Corp. Ltd (ONGC) officials familiar with the development said.
The company is jointly owned by ONGC, GAIL (India) Ltd and Gujarat State Petroleum Corp. Ltd (GSPC). ONGC and GAIL hold 44% each in OPaL, and GSPC holds the rest.
ONGC also plans to sell shares to the public OPaL in a few years from now. Post the stake sale and the listing, ONGC said the envisaged equity structure would be: ONGC (26%), GAIL (15.5%), GSPC (0.5%), other public sector companies (8%), strategic investor 25%, and public shareholding (25%).
"We are in discussions with PSU (public sector undertaking) players as well as petrochemical players in the Middle East for taking up to a 25% stake in the project," said one of the three ONGC officials cited above. "OPaL is looking for a strategic investor for a portion of the balance untied equity who could bring value to the project," said an ONGC spokesperson, in reply to an email.
The USD4.5 bln mega petrochemical project is located at Dahej, Gujarat. The company has in the past held talks with several foreign firms for a stake sale but talks were stuck due to several delays in the project. The project was to be commissioned in 2011. The project has been delayed, leading to cost overruns. The plant was initially estimated to cost Rs.12,440 crore, but since then the cost has gone up to Rs.27,011 crore so far. OPaL is also in talks with private equity firms to offload stake in the company.
"They had met investment banks a month back as they are looking to raise nearly Rs.250-300 crore by selling stake to a private equity fund," said a person who had met ONGC officials to seek a mandate for the process.
As MRC wrote previously, in November 2015, Kuwait's Petrochemical Industries Company (PIC) said it was close to signing a deal to acquire 45% of the OpaL chemical factory in India.Tthe company's chief executive Asaad Al-Saad attributed delays in the completion of the deal to tough Indian laws, but said he was optimistic due to the support of India's government and the strength of its economy.
OPaL is a joint venture of Oil and Natural Gas Corp. (ONGC - 26%), Gas Authority of India Limited (GAIL - 17%) and Gujarat State Petroleum Corp. (GSPC - 5%), with the balance held by other investors and public shares.
MRC