Government Approves ONGC’s Big Investment in OPaL
New Delhi, India – The central government has given the green light to Oil and Natural Gas Corporation Limited (ONGC) to make a significant investment in ONGC Petro additions Limited (OPaL). This decision is a major milestone for OPaL, as it will receive an additional equity capital of Rs 10,501 crore.
In a statement, ONGC said, “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).”
Additionally, the government has approved the conversion of back-stopped Compulsorily Convertible Debentures (CCDs) worth Rs 7,778 crore and a balance payment of Rs 86 crore related to share warrants. This brings the total investment to Rs 18,365 crore, making OPaL a subsidiary of ONGC with a 95.69% equity stake.
“This will change the status of OPaL into a subsidiary of ONGC with a 95.69 per cent equity stake,” the company 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 government has also allowed the allocation of 50% 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 will provide essential feedstock support to OPaL, with pricing set at 20% above the APM (Administered Price Mechanism) price.
The APM price is determined as 10% 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.
Doubts Revealed
ONGC -: ONGC stands for Oil and Natural Gas Corporation Limited. It is a big company in India that finds and produces oil and gas.
OPaL -: OPaL stands for ONGC Petro additions Limited. It is a company that makes chemicals from oil and gas.
Rs 10,501 crore -: Rs 10,501 crore is a very large amount of money. One crore is equal to 10 million, so this is a huge investment.
debentures -: Debentures are like loans that a company takes from people or other companies. They promise to pay back the money with interest.
share warrants -: Share warrants are special documents that give the holder the right to buy shares of a company at a later date.
subsidiary -: A subsidiary is a company that is controlled by another company. In this case, OPaL is controlled by ONGC.
equity stake -: An equity stake means owning a part of a company. ONGC will own 95.69% of OPaL.
APM price -: APM price stands for Administered Pricing Mechanism price. It is a government-set price for gas in India.
petrochemical industry -: The petrochemical industry makes products from oil and gas, like plastics and chemicals.
