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Richa Mishra

New Delhi , Nov. 4

OIL and Natural Gas Corporation (ONGC) is set to float short tenders inviting domestic merchant bankers for conducting a due diligence to acquire stake in the petrochemicals business of SPIC (Southern Petrochemical Industries Corporation Ltd).

According to an ONGC official, the company proposes to appoint a merchant banker shortly.

Following the Petroleum Ministry advice to explore involvement in SPIC Petrochemicals Ltd, SPIC's subsidiary set up to execute the petrochemical project, ONGC has taken the initiative.

ONGC sources do not rule out a complete buyout of SPIC's petrochemical project. However, a final decision would be taken only after the due diligence and valuation of the project is completed, the official said.

SPIC Petrochemicals was to put up a purified terephthalic acid (PTA) plant and a polyester filament yarn (PFY) project at Manali, north of Chennai. Attempts to revive the project have not yielded much result, with almost Rs 1,000 crore locked up in the project.

During the time when the Madras High Court had passed an injunction in October 1997, an Rs 946 crore was locked in the project. Of this, SPIC's contribution was Rs 252 crore and the lenders had brought in Rs 694 crore. At that stage, the PFY plant was more than 75 per cent complete, or about 12 months from commencing production. The PTA plant had progressed 11 per cent, or about two years away from production.

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