NEW DELHI: The central government has granted an approval letter to Oil and Natural Gas Corporation Limited (ONGC) to invest significantly in ONGC Petro additions Limited (OPaL), the company informed the exchange in a filing.
This decision marks an important moment for OPaL, as it will receive an infusion of additional equity capital amounting to Rs 10,501 crore.
“The Company has received a letter dated 09.08.2024 from the Ministry of Petroleum & Natural Gas, Govt. of India (GoI), inter-alia, conveying approval of the GoI for infusion of additional equity capital up to Rs 10,501 crore in ONGC Petro additions Limited (OPaL),” said the company on Friday.
Furthermore, the GoI has also sanctioned the conversion of back-stopped Compulsorily Convertible Debentures (CCDs) worth Rs 7,778 crore, along with a balance payment of Rs 86 crore related to share warrants. The total investment thus reaches Rs 18,365 crore, which will elevate OPaL’s status to a subsidiary of ONGC, with a commanding 95.69 per cent equity stake.
“This will change the status of OPaL into a subsidiary of ONGC with a 95.69 per cent equity stake,” the company statement added.
This strategic move not only strengthens ONGC’s position in the petrochemical sector but also provides a clear roadmap for OPaL’s future operations.
The GoI has also permitted the allocation of 50 per cent of the annual gas production from new wells or well interventions in ONGC’s nomination fields, or up to 3.2 MMSCMD of domestic natural gas, whichever is lower.
This allocation is intended to provide essential feedstock support to OPaL, with pricing set at 20 per cent above the APM (Administered Price Mechanism) price. The company added that the APM price is determined as 10 per cent of the Indian crude basket price per barrel of oil, ensuring that OPaL has a stable and competitive pricing structure for its operations.
This approval is expected to enhance OPaL’s operational capabilities and contribute to the overall growth of the petrochemical industry in India.