SEPTEMBER 20239TOPSTORYONGC TO INFUSE RS 15,000 CR IN OPALVALE INTERNATIONAL TO OFFER IRON ORE TO ESSAR'S STEEL PROJECT IN SAUDI ARABIAAs part of a financial restructuring initiative, the state-owned Oil and Natural Gas Corporation (ONGC) will invest around Rs 15,000 crore in OPaL, pushing the gas utility GAIL out of the petrochemical company. In ONGC Petro-additions (OPaL), which runs a massive petrochemical factory in Dahej, Gujarat, ONGC now owns a 49.36 percent ownership. Gujarat State Petrochemical Corp (GSPC) owns the final 1.43 percent, leaving GAIL (India) with a 49.21 percent stake. The petchem company, which had been losing money because of its enormous debt, had last week received board approval from ONGC to restructure its finances.ONGC will convert share warrants into equity, buy back debentures and invest Rs 7,000 crore more equity, which will give it about 95 percent stake, the company said in a stock exchange filing. The proposal approved includes "conversion of share warrants issued by OPaL and subscribed by ONGC into equity shares upon payment of final call money of Rs 86.281 crore at the rate of Rs 0.25 per warrant," it said. Also, ONGC will "buy back compulsory convertible debentures (CCDs) of Rs 7,778 crore." CCDs issued by OPaL with backstopping support of ONGC are presently held by financial institutions. ONGC will also invest Rs 7,000 crore in equity/quasi-equity security of OPaL, it said.Upon implementation, OPaL would become a subsidiary of ONGC, it added. The financial restructuring "will augment the holding of ONGC in OPaL and OPaL will become more profitable," it said, adding that the total cost of acquisition would be Rs 14,864.281 crore. OPaL was incorporated on November 15, 2006, as a mega, grassroots petrochemical complex to use naphtha produced by ONGC at Hazira as well as rich gas being imported at Dahej. It is an anchor tenant of Dahej PCPIR, Gujarat and has exported its products to more than 50 countries.to cost Rs 12,440 crore, was completed only in 2017 at a cost of about Rs 30,000 crore. GAIL and GSPC will now together hold close to 5 percent in OPaL post-financial restructuring. ONGC had invested about Rs 4,400 crore as equity and warrants in OPaL. As a Maharatna PSU, it is permitted to invest only up to Rs 5,000 crore in a joint venture. The Saudi Arabian green steel project will receive iron ore from the world's largest mining company, Vale International, according to a statement released by the Indian company. Essar and Bahrain Steel had already signed a contract for the supply of DR-grade pellets for the project. With the agreement with Vale, Essar has guaranteed a continuous supply of raw materials to the Saudi steel plant.Vale International, a wholly-owned subsidiary of Vale SA, a major producer of Brazilian iron ore and iron ore agglomerates, has partnered with the worldwide conglomerate Essar Group. According to Vale, Essar Group would receive 4 million tonne of iron ore agglomerates annually from the company.Vale is a top supplier of premium raw materials to integrated steel makers all over the world, operating from sites in Brazil and Oman. In Ras Al Khair, Saudi Arabia, Essar is considering spending about $ 4.5 billion to build an integrated steel mill.The project is planned to include a 5 million tonne per year direct reduction iron (DRI) capacity, divided into two 2.5 million tonne per module modules, along with a 4 million tonne per year hot strip capacity. Along with galvanising and tin plate lines, the project also includes a million tonnes of cold rolling capacity.
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