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, a top official said.
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 and C2+ components from imported LNG, 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. Kumar, who pivoted the turnaround story with his finance background, 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.
Oil and Natural Gas Corporation (ONGC) during 2002 to 2006 conceptualized several joint ventures to diversify in other than exploration and production (E&P) business with an objective of value addition, downstream integration and monetisation of its own stranded gas assets. These projects - OPaL, ONGC Mangalore Petrochemicals Ltd (OMPL) and ONGC Tripura Power Company (OTPC) were successfully implemented and are now operating at full capacity.
ONGC as promoter played lead role in selection of LSTK/PMC contractors, execution of various feedstock and off-take agreements, resolution of various complex techno- commercial, regulatory and taxation issues crept during execution and commissioning of these projects.
