The Hindu Business Line : DPE for hiking OVL’s investment limit

New Delhi, Aug. 14 ONGC Videsh Ltd (OVL), the overseas investment arm of ONGC, seems to have found a supporter in the Department of Public Enterprises (DPE) on the issue of increasing its investment limit. OVL has been demanding an increase in its investment limit, which is currently set at $75 million or Rs 300 crore, whichever is less.

Sources said, at a recent meeting the Department is said to have suggested that if the Petroleum Ministry agrees then the Government could consider increasing the investment limit of OVL. The overseas arm of ONGC has already approached the Ministry to consider empowering its board to take investment decisions and increasing the investment limit.

Losing opportunities

“OVL has proposed that the investment limit could be increased up to Rs 1,000 crore. For investments above the proposed limit competent authorities can be empowered,” sources told Business Line. Currently, any investment s beyond the permissible limit need to be approved by the Cabinet Committee on Economic Affairs, due to which the company often lost emerging investment opportunities, the sources said.

A Petroleum Ministry official said OVL’s proposal was under consideration. There were two options before the Ministry. The first option was to increase the limit up to Rs 1,000 crore. The second was to consider the recommendation by the high-level Krishnamurthy Committee on Synergy in Energy of raising the limit to Rs 2,000 crore.

In 2005, the Government had increased the investment limit of OVL from Rs 200 crore to Rs 300 crore. However, the company was of the view that such low investment limits had little relevance in the high-value oil and gas sector.

Global presence

The deal sizes, in which OVL would be interested, were in the range of $400-$800 million. In 70 per cent of the deals, the buyers do not want to wait and as a company into the business of acquiring equity in oil and natural gas assets overseas, OVL cannot afford to close such windows of opportunity, the sources added.

OVL today has presence in 15 countries with 26 projects having a total investment of over $5 billion. It has blocks in Vietnam (three), Sudan (four), Myanmar (two), Libya (three), Syria (two), Iran (one), Iraq (one), Russia (one), Brazil (one), Cuba (two), Egypt (one), Nigeria Saotome JDZ (one), Nigeria (two), Qatar (one) and Colombia (one). OVL has sourced 7.95 million tonnes of equity oil and gas during 2006-07.