Oil and Natural Gas Corp (ONGC) is planning an initial public offering (IPO) of its subsidiary, which is building the Rs 12,440 crore petrochemical plant at Dahej in 2011, even as it agreed to give the state gas utility GAIL India a 19 per cent stake in the mega project.
The public sector major is considering selling up to 25 per cent of the equity shares in ONGC Petro-additions (OPaL), the special purpose vehicle formed for setting up petrochemical complex at Dahej SEZ, a senior company official said.
"The IPO will happen at least one and half years from now when there is visible activity on ground," he said.
ONGC agreed yesterday evening to GAIL's request for 19 per cent stake in the venture. "We had earlier agreed to give 9 per cent stake but they were asking for more. So we have in-principle agreed for giving more," he added.
GAIL Chairman and Managing Director U D Choubey met ONGC head R S Sharma yesterday evening for more stake in the plant. ONGC will give 20-25 per cent stake to a foreign partner who is either a product offtaker or a marketer.
"We are looking for someone who can sell polymers," he said.
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The oil utility holds 26 per cent stake in OPaL and five per cent is with Gujarat State Petroleum Corporation (GSPC).
The petrochemical complex would be built by February 2012, the official said adding the project is being funded in 2.55:1 debt-equity ratio.
OPaL will use C2-C3 (ethane and propane) compounds extracted from imported liquefied natural gas (LNG) to make polymers at the proposed plant.
The Rs 1,100-crore plant to extract C2-C3 from the LNG that Petronet imports from Qatar would be ready by the end of the financial year while the petrochemical complex would come up by February 2012.
ONGC would in the interim period sell C2-C3 compounds to companies like Reliance-owned IPCL or even export, the official said.
GAIL had sought equity in OPaL as it already had a presence in petrochemical business.
The petrochemical complex would comprise of global scale cracker and downstream polymer plants, the official said.
This complex would be integrated with ONGC's C2-C3 plant, which is currently under execution (at Dahej) and Naphtha as feedstock from ONGC's operational units at Hazira and Uran.
The plant is part of a new petrochemical complex being built in Gujarat and it would produce 1.1 million tonnes of ethylene, 340,000 tonnes of propylene, 135,000 tonnes of benzene and 95,000 tonnes of butadiene per annum. These products are used as source materials in plastic industry.
The downstream unit will be producing HDPE, LLDPE, Polypropylene, Butene-1, Benzene, Py-gasoline, Butadiene and the associated products.