ONGC mulls public issue for Rs 12,440-cr plant...

Written by Press Trust of India | New Delhi | Updated: Feb 28 2009, 05:33am hrs
Oil and Natural Gas Corp (ONGC) is planning an initial public offering of its subsidiary, which is building the Rs 12,440 crore petrochemical plant at Dahej in 2011, even as it agreed to give the state gas utility GAIL India a 19% stake in the mega project.

The public sector major is considering selling up to 25 % of the equity shares in ONGC Petro-additions Ltd (OPaL), the special purpose vehicle formed for setting up the petrochemical complex at Dahej SEZ, a senior company official said.

The IPO will happen at least one and half years from now when there is visible activity on ground, he said.

ONGC in-principal agreed to GAILs request for 19% stake in the venture on Thursday. We had earlier agreed to give 9% stake but they were asking for more. So we have in-principle agreed for giving more, he added.

GAIL chairman and managing director U D Choubey met ONGC head R S Sharma yesterday evening for more stake in the plant.

ONGC will give 20-25% stake to a foreign partner who is either a product offtaker or a marketer. We are looking for someone who can sell the polymers, he said.

The oil utility holds 26% stake in OPaL and 5% is with Gujarat State Petroleum Corp (GSPC).

The petrochemical complex would be built by February 2012, the official said adding the project is being funded in 2.55:1 debt-equity ratio.

OPaL will use C2-C3 (ethane and propane) compounds extracted from imported liquefied natural gas (LNG) to make polymers at the proposed plant.

The Rs 1,100-crore plant to extract C2-C3 from the LNG that Petronet imports from Qatar would be ready by the end of the fiscal while the petrochemical complex would come up by February 2012.

ONGC would in the interim period sell C2-C3 compounds to companies like Reliance-owned IPCL or even export, the official said. GAIL had sought equity in OPaL as it already had a presence in petrochemical business.

The petrochemical complex would comprise of global scale cracker and downstream polymer plants, the official said.

This complex would be integrated with ONGCs C2-C3 plant, which is currently under execution (at Dahej) and Naphtha as feedstock from ONGCs operational units at Hazira and Uran.

The plant is part of a new petrochemical complex being built in Gujarat and it would produce 1.1 million tons of ethylene, 340,000 tons of propylene, 135,000 tons of benzene and 95,000 tons of butadiene per annum. These products are used as source materials in the plastics industry. The downstream unit will be producing HDPE, LLDPE, Polypropylene, Butene-1, Benzene, Py-gasoline, Butadiene and the associated products.