ONGC borrows Rs 9,000cr to part fund Dahej plant

Oil and Natural Gas Corporation (ONGC) is borrowing about Rs 9,000 crore from a group of banks to part fund the Rs 12,440 crore petrochemical plant it is building at Dahej in Gujarat.

"SBI Caps was the lead arranger of the debt and we hope to sign the agreements for the syndicated loan by March end or early April," ONGC Director (Finance) D K Sarraf said here.

The petrochemical complex, that would be built by February 2012, is being funded in 2.55:1 debt-equity ratio.

ONGC holds 26 per cent stake in ONGC Petro-additions (OPaL), the special purpose vehicle formed for setting up the chemical complex at Dahej SEZ. Five per cent stake is with Gujarat State Petroleum Corporation (GSPC). ONGC may give another 19 per cent to state-run gas utility GAIL India.

The company may consider selling up to 25 per cent stake in OPaL through an initial public offering (IPO) and the remaining may be given to a strategic investor.

"The IPO will happen at least one-and-a-half years from now when there is visible activity on ground," Sarraf said.

ONGC will give 20-25 per cent stake to a foreign partner who is either a product offtaker or a marketer. ONGC is looking for someone who can sell the polymers the plant makes.

OPaL will use C2-C3 (ethane and propane) compounds extracted from imported liquefied natural gas (LNG) to make polymers at the proposed plant.