ONGC in talks with Saudi Aramco others for stake in petroplant

ONGC Petro additions Ltd in which ONGC holds 26% stake, is building a 1.1 MT plant at Dahej in Gujarat

State-owned Oil and Natural Gas Corp (ONGC) is in talks with Saudi Aramco of Saudi Arabia and investment boards of Kuwait and Qatar for selling 25-30% stake in a Rs 21,396 crore mega petrochemical plant it is building in Gujarat.

ONGC Petro additions Ltd (OPaL), in which ONGC holds 26% stake, is building a 1.1 million tonnes plant at Dahej in Gujarat. The plant was originally scheduled to be commissioned by December this year. But it is running behind schedule and is now expected to come up sometime in 2015.

"Currently, less than 49% of the project equity has been tied-up. We plan to list OPaL and induct a strategic partner for the rest," a top company official said.

Several companies had envisaged interest but nothing has been so far finalised because of the time and cost overruns in the project.

Those who have evinced interest include Saudi Aramco, the national oil company of Saudi Arabia, which is keen to market a portion of the petrochemicals in the Middle-East, the official said.

Besides, Kuwait Investment Authority and Qatar Investment Authority too had evinced interest as had technology providers like Bassel.

Currently, state gas utility GAIL India Ltd holds 15.5% in OPaL and Gujarat State Petroleum Corp Ltd (GPSC) another 5%. State Bank of India, the lead banker to the project, has offered to take 3-5% of equity on closure of the debt syndication exercise.

ONGC has mandated Ernst & Young to search for a strategic partner who could be a technology provider or a marketer of chemicals the plant will produce.

The project has already had two cost escalations - project cost has gone up from Rs 12,440 crore envisaged in 2008-09 to Rs 19,535 crore in 2010 and now Rs 21,396 crore.

Besides cost and time overruns, the project faces a major challenge in getting raw water supply.

Water for the project is eventually to come from a 75 MGD desalinisation plant in the Dahej SEZ Ltd to be built by a consortium of Hitachi, Itochu and Hyflux which is slated to go on stream by 2015-16. But the project will be ready before that and there seems to be question mark over where the water is going to come from.