State-owned Oil and Natural Gas Corporation (ONGC) will inject about INR 15,000 crore into ONGC Petro-additions Ltd (OPaL) as part of a financial restructuring process, according to a stock exchange filing on Thursday. ONGC currently holds a 49.36% stake in OPaL, which operates a mega petrochemical plant at Dahej in Gujarat. GAIL (India) Ltd owns 49.21% and Gujarat State Petrochemical Corp (GSPC) has the remaining 1.43%.
The ONGC board approved the financial restructuring last week due to OPaL's high debt and consequent losses. As part of the restructuring, ONGC will convert share warrants into equity, buy-back debentures, and invest an additional INR 7,000 crore (approx. $841.11 million) in equity, which will increase its stake to around 95%.
The approved proposal includes the conversion of share warrants issued by OPaL and subscribed by ONGC into equity shares upon payment of final call money of INR 86.281 crore at the rate of INR 0.25 per warrant. Additionally, ONGC will buy-back compulsory convertible debentures (CCDs) valued at INR 7,778 crore, currently held by financial institutions.
Upon completion of this restructuring, OPaL will become a subsidiary of ONGC. The total cost of acquisition is expected to be around INR 14,864.281 crore.
GAIL had initially picked up a stake in OPaL in 2008 when the petrochemical complex at Dahej was under construction. However, due to significant cost and time overruns, GAIL decided to limit its equity contribution to the original INR 996.28 crore. The plant, initially projected to cost INR 12,440 crore, was only completed in 2017 at a cost of about INR 30,000 crore.
Following the financial restructuring, GAIL and GSPC will together hold close to 5% in OPaL. As of March 31, 2023, OPaL's accumulated losses amounted to INR 13,000.3 crore.
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