ONGC turns around its subsidiaries; OPaL, OMPL, OTPC, all in black

India’s top oil and gas producer ONGC has scripted a sharp turnaround in fortunes of its subsidiaries with its petrochemical unit reporting its first ever profit.

ONGC Petro additions Ltd (OPaL), the venture ONGC floated for downward integration and expansion into petrochemical field by utilizing its naphtha stream from Hazira and Uran has been steadily seeing operational profit or EBITDA improvement since 2016-17 but the lopsided capital structure with high-debt servicing cost and high depreciation during the initial period of capitalisation led to incurring net losses.

“During the first half of the current fiscal (April to September), OPaL made a profit after tax of Rs 18 crore,” ONGC Chairman and Managing Director Subhash Kumar said.

OPaL is in the process of exiting from the SEZ which would improve the profitability by Rs 800 crore per annum and about Rs 600 crore of more profits will be added if the government were to approve a proposal for the company becoming a unit of ONGC or is merged with it.

Between 2002 and 206, Oil and Natural Gas Corporation (ONGC) conceptualized several joint ventures to diversify in other than exploration and production (E&P). These projects – OPaL, ONGC Mangalore Petrochemicals Ltd (OMPL) and ONGC Tripura Power Company (OTPC) were successfully implemented and are now operating at full capacity.

Kumar said as per ONGC 2040 Strategy, going forward 70 per cent revenue is expected from refinery and petrochemical business and 10 per cent profit will be contributed from non-oil and gas sector, and so the role of these non-E&P JVs will continue to play a crucial role in the Group.

ONGC holds 49.36 per cent stake in the 1.1 million tonnes per annum capacity OPaL, GAIL has 49.21 per cent and GSPC the remaining 1.43 per cent. OTPC, in which ONGC holds 50% stake, set up a 726.6 MW gas-based power plant in Tripura. The plant started operation in March 2014. OTPC caters to about 30% of electricity requirement of the entire North Eastern region at a competitive tariff. Petronet MHB Ltd is another classic turn around story where ONGC as a promoter played a crucial role in turning a loss making entity to a profit making dividend paying entity.

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