ONGC may sell 19% stake in Dahej plant

Oil and Natural Gas Corporation (ONGC) may sell 19 per cent stake in its upcoming Dahej plant to GAIL India Ltd. The Rs 12,440-crore plant is being set up by ONGC Petro-additions Ltd (OPaL), a special purpose vehicle jointly promoted by ONGC and Gujarat State Petroleum Corporation (GSPC).

“Initially, they started with 9 per cent, but now they have agreed to sell 19 per cent stake,” GAIL chairman and managing director U D Choubey told reporters on the sidelines of a press conference. He, however, did not disclose the value of the deal.

He said the company would fund the purchase through a mix of cash flow and debt, adding that it may raise up to $500 million (around Rs 2,550 crore) in the fourth quarter of the next financial year to fund its expansion plans. GAIL’s share price at the Bombay Stock Exchange today closed at Rs 220.50, up 4.88 per cent from the previous close.

However, ONGC said it was yet to finalise the deal. “OPaL can sell up to 19 per cent stake through the issue of fresh shares to GAIL. The discussion on the same is on between GAIL and us. The money raised in the process will go to OPaL,” said DK Sarraf, company’s director (Finance).

ONGC holds 26 per cent stake in OPaL while GSPC holds another 5 per cent. After this stake sale, the remainder 50 per cent equity will be held by strategic investors and financial institutions, which the oil producer is in the process of finalising.

The plant is expected to have an annual capacity of 1.1 million tonnes of ethylene, 340,000 tonnes of propylene, 135,000 tonnes of benzene and 95,000 tonnes of butadiene. These products are used as source materials in the plastics industry.