OPaL in talks with Kuwait’s PIC for stake sale

ONGC Petro-additions Ltd (OPaL) is in talks with Kuwait’s Petrochemical Industries Company (PIC) on a possible stake sale.

“We are ready to offer as much as 40 per cent to the new partner,” K Satyanarayana, Chief Executive Officer, OPaL, on the occasion of the inauguration of the country’s single largest petrochemical plant by OPaL at the Dahej Special Economic Zone (SEZ) by Prime Minister Narendra Modi.

Satyanarayana said the company has been in talks with PIC for over a year, and added that with the completion of the mega-Dahej project, OPaL was in a stronger position in the negotiations.

According the the original equity structure of the company, 50 per cent of the capital was to be put in by the PSU promoters and the rest was to come as private equity.

On the Dahej project, he said: “We have invested about ₹30,000 crore for the project with a combination of debt and equity out of which the equity portion is ₹11,000 crore. Once operational at full capacity, we expect the plant to generate annual revenue of ₹16,000 crore.”

The plant, under the country’s first Petroleum, Chemical and Petrochemical Investment Region (PCPIR), will provide direct employment to 3,500 and indirect employment to 10,500.

Notably, the project costs have increased by multiple times due to delays. Conceived in 2006, the project witnessed cost over-run from initial investment plans of ₹12,440 crore to the actual investment of ₹30,000 crore.

“Delay due to some contractors caused the cost over-run,” stated Satyanarayana.

Addressing a gathering of company employees, stakeholders and industry players here, Prime Minister Modi stated that in 2011-12, Dahej ranked 23rd in the global industrial ranking.

“The Dahej area has already seen investment worth ₹40,000 crore. Dahej is among the four first PCPIRs in the country. Under the Dahej PCPIR, there is a potential to employ 32,000 people directly. When fully-functional, the area will provide employment to about 800,000 people,” Modi said.

The Prime Minister also stated that India’s average per capita consumption of polymers stood at 10 kg against a world average of 32 kg.

“With the base of middle-class expanding, income levels rising and expansion of cities, there is a good potential for per capital consumption of polymers to rise,” said Modi in his address.

OPaL projects its market share in the polymer sector to increase to 13 per cent by 2018 from negligible currently.

Modi also took a jibe at his opponents, who criticised the demonetisation.

Modi stated that world leaders have welcomed the step and that the growth of the economy has not been hampered as wrongly propagated by the Opposition.

On the price rise, Modi stated, “In the recent UP election campaigning, no party questioned the government on the issue of price rise. This means that the government has been successful in keeping inflation in check.”

A joint venture promoted by ONGC (26 per cent), GAIL (9 per cent) and GSPC (0.2 per cent), OPaL is implementing a grass root integrated petrochemical complex.

OPaL expects to export 40 per cent of the production, which has already started with first consignment of butadiene supplied by the company recently.

The facility will source feed of C2+ streams such as ethane, propane and butane from C2-C3 extraction plant, and naphtha from Hazira & Uran to produce polyethylene and polypropylene.

The total planned capacity of the plant is 1.9 million tonnes of polymer and chemicals, including 1.4 million tonnes of polymer like LLDPE and HDPE, polypropylene and 0.5 million tonnes of chemicals such as benzene, butadiene and pyrolysis gasoline.

The products will be marketed under the brand name Opalene and will be used in the industries such as consumer durables, automotive, pipes, plastics solutions, textiles and food.

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