In a bid to expand its petrochemicals manufacturing capacity, the Oil and Natural Gas Corp (ONGC) will invest Rs 1 trillion by 2030, a report by The Economic Times (ET) said. This is a part of the Centre's larger plan to make India a major global petrochemical hub.
ONGC's joint venture ONGC Petro additions Ltd (OPaL) and its subsidiary Mangalore Refinery and Petrochemicals Ltd (MRPL) will implement the expansion plans. The Maharatna company is targeting to double the production of these companies to 8 million metric tonnes per annum by 2030.
Moreover, two mega projects, one on the east coast of the country and the other on the west, are also being planned. These plants will either use crude oil directly to produce chemicals or will take the stock from other sources, the report added.
However, there are two challenges ONGC would need to overcome before it starts the expansion.
First is the skewed capital structure of OPaL. The company, a joint venture of ONGC and the Gas Authority of India Ltd (GAIL), has taken a cumulative debt of Rs 35,000 on a very small equity base. The ET report said that a group of experts is working on either making OPaL a subsidiary of ONGC or getting a new equity investor.
The Centre had earlier refused ONGC's plan to infuse Rs 10,000 crore in OPaL, which would have made it the petrochemical giant's subsidiary.
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The second challenge is the fall in the supply of cheap domestic natural gas. The Centre has diverted domestic natural gas supply to other sectors, making ONGC highly dependent upon costly imported gas.
