Page 44 - Plastics News April 2018

Business news

Ratnagiri refinery open to offer ONGC may buy out GAIL in

majority stake to Aramco OPaL

etr o l eum minis ter il and Natural Gas Corp (ONGC) may buy out gas
PDharmendra Pradhan has Outility GAIL India Ltd in its Dahej mega petrochemical
said the government is open to project in Gujarat to take full control of the recently
Saudi oil giant Aramco's interest commissioned plant. GAIL had in 2008 picked up 19 per
to own majority stake in the cent stake in ONGC Petro-additions Ltd (OPaL), which
proposed Rs 3-trillion refinery at was then building the mega petrochemical complex at
Ratnagiri, which when completed Dahej in Gujarat.
will be the largest single location But the project, which started in 2006, faced major
refinery complex in the world cost and time overruns, which forced GAIL to restrict its
with a capacity of 60 million tonne. Saudi Aramco has equity contribution to the original Rs 996.28 crore. This
reportedly sought majority ownership in the mega investment in the expanded project cost meant that the
refinery-cum-petrochemical complex for which state- gas utility's stake dropped first to 17 per cent, then to
owned oil firms Indian Oil, Bharat Petroleum and Hindustan 15.5 per cent and now about 9 per cent, sources privy
Petroleum have inked an agreement. "Aramco is in to the development said. "It doesn't make any business
discussions with us. We have held many rounds of talks
on the Ratnagiri project with them. It's a commercial sense to hold such a small percentage stake and it is
project and we are open to their suggestion (of giving best that ONGC buys out GAIL in the project," they said.
majority stake)," Pradhan told local media The minister The 1.1 million tonnes plant, which at the time of
was responding to a question on whether the world's conception was projected to cost Rs 12,440 crore, got
largest oil company that is working on a USD 1-trillion completed only last year for about Rs 30,000 crore.
initial public float this year, has really sought majority After GAIL in 2008 agreed to pick up 19 per cent stake
stake in the project. Some media reports had last month in OPaL, the project cost was in 2010 was revised to
said the Saudis were interested in the USD 40-billion Rs 19,535 crore. It was couple of years later further
project provided India was ready to offer majority control revised upwards to Rs 21,396 crore with December
and that the facility will mostly use Saudi crude. When 2013 set as the commissioning date. Market Sources
specifically asked whether the government was ready said when project cost was revised to Rs 19,535 crore,
to offer majority stake in the project, Pradhan said GAIL decided to restrict
"yes", though did not quantify their demand. "Yes it's a its participation to 17
commercial project and the ownership is still open," said per cent. This was done
the minister. IOC currently owns a 50 per cent stake in the because the company's
project, with the remainder is equally split between BPCL
and HPCL. When asked about the status of the Ratnagiri board had powers to
refinery, especially land procurement in the face of stiff approve an investment
opposition from the public as well as the ruling BJP ally of only up to Rs 1,000
Shiv Sena, Pradhan said, "I am optimistic that everything crore. Consequently,
can be resolved through discussions. Every issue can be it decided to make an
discussed and resolved with talks. Let's see." Once all equity contribution of
the clearances are in, it will at least five to six years for Rs 996.28 crore towards the 17 per cent stake, they
the refinery to commence production. The refinery will said. But when the project cost went up further to
include three crude units of 20 million tonnes each and Rs 21,396 crore, the promoter's equity contribution
will produce petrol, diesel, LPG, aviation turbine fuel increased from Rs 5,860.5 crore to Rs 6,418.8 crore at
(ATF) and feedstock for making petrochemicals such as 70:30 debt-equity ratio. It is also learnt that GAIL is
plastics, chemicals and textiles. not inclined to make any additional equity contribution.

Plastics News April 2018 44