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| ONGC to raise Rs 20,000 cr to fund projects by units |
| Bloomberg / New Delhi Apr 10, 2009, 00:01 IST |
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Oil & Natural Gas Corporation (ONGC), India’s largest energy explorer, plans to borrow as much as Rs 20,000 crore ($4 billion) to fund projects by units as a global recession and slowing inflation lower costs.
The loans included Rs 8,800 crore to be raised in the next two to three months for a planned chemical venture in the western state of Gujarat, Chairman and Managing Director RS Sharma said by telephone in New Delhi today.
ONGC’s borrowing plan comes after crude oil prices declined more than 65 per cent from a July record, lowering the selling price of the explorer’s oil. India’s central bank has lowered the benchmark interest rate five times since October to protect India from the deepening global recession.
“ONGC can get loans at cheap rates, as it doesn’t have too much debt on its books and its servicing ability is good,” said Deepak Pareek, an analyst at Mumbai-based Angel Broking Ltd. “The monetary easing will make it easier to access loans.”
Pareek, the top-ranked analyst for ONGC according to data compiled by Bloomberg, rates the stock a “buy.”
The money raised would be used in projects worth around Rs 30,000 crore, Sharma said. These include a power plant in Tripura and the expansion of a refinery operated by Mangalore Refinery & Petrochemicals Ltd in Karnataka.
“We hope to raise the remaining funds in a phased manner over the next year or so,” said Sharma. “Banks have already committed to lend us the money we need.” He didn’t specify if the money would be raised from domestic or overseas banks.
The loan for the chemical venture would be raised locally, ONGC Director of Finance DK Sarraf said today. The company had cash and bank balances of around Rs 13,000 crore as of March 31, he said.
ONGC and partner Gujarat State Petroleum Corporation, a state government-owned explorer, plan to spend Rs 12,400 crore to set up the chemical plant at Dahej, which is scheduled to start production by 2012.
GAIL India Ltd, the nation’s largest gas distributor, will be offered a 19 per cent stake in the venture, known as ONGC Petro-Additions Ltd.
The borrowing plan excludes $1 billion raised in January by ONGC Videsh Ltd, a unit of the state-owned explorer, to fund the acquisition of Imperial Energy Plc.
New Delhi-based ONGC planned to spend Rs 20,000 crore in the year that started April 1, Sharma said. Around Rs 8,000 crore will be spent on exploration for oil and gas.
ONGC shares have gained 34 per cent this year as crude oil in New York trading climbed 14 per cent. The benchmark Sensitive Index of the Bombay Stock Exchange has advanced 13 per cent since the start of this year.
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