The central government has approved Oil and Natural Gas Corporation Limited (ONGC) to make a substantial investment in ONGC Petro additions Limited (OPaL) through an approval letter. This move signifies a crucial point for OPaL, as it is set to gain an injection of extra equity funding totaling 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.
Moreover, the Government of India has approved the transformation of backed Compulsorily Convertible Debentures (CCDs) valued at Rs 7,778 crore, in addition to a remaining payment of Rs 86 crore for share warrants. The overall investment will amount to Rs 18,365 crore, leading to OPaL becoming a subsidiary of ONGC, holding a significant 95.69 percent equity ownership.
"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 move enhances ONGC's position in petrochemicals and sets a clear path for OPaL's future activities. The Government of India has also approved the allocation of 50% of the yearly gas output from new wells or interventions in ONGC's fields, or a maximum of 3.2 MMSCMD of local natural gas, whichever is less.
This allocation is meant to give necessary feedstock assistance to OPaL, with pricing being established at a 20 percent premium above the APM (Administered Price Mechanism) price.
