Aiming to seek a Navratna company status, State-owned ONGC's overseas arm ONGC Videsh ltd (OVl) has sought greater financial autonomy, which will enable it to decide on investments to the tune of $1 billion (about rs6,400 crore) without Government nod to speed up acquisition of overseas oil and gas fields.
OVl's board as of now has powers to decide on investment of up to rs300 crore. An amount higher than that needs clearance of the Cabinet Committee on Economic Affairs (CCEA).
“We are seeking at least Navratna PSU status for OVl. Around $1 billion investment powers should be granted to us,” OVl's Managing Director Narendra K Verma told reporters on Wednesday.
A Navratna status gives PSUs' boards financial powers to decide on investment projects worth up to rs1,000 crore, without Government approval. Anything beyond that requires the consent of the Cabinet.
“We are are seeking more than Navratna powers,” Verma said, adding that we are seeking powers to decide on investments of up to $1 billion.”
Greater financial powers will help the company make quicker decisions on acquiring oil and gas assets abroad. Verma said the rs300 crore financial power for OVl was set in 2000 when the rupee-dollar exchange rate was completely different.
“Right now rs300 crore is nothing,” he said. OVl has 35 projects in 16 countries from Brazil to New Zealand and is looking at certain acquisitions in oil and gas rich regions.
A Navranta PSU status is granted to a state firm if it has made consistent profits above a certain level. However one of the conditions for granting a Navranta status is that the company should be listed on stock exchanges. Verma though sounded confident and said, “listing is a requirement but there exemptions can also be granted.” At the same time he cautioned that under the current situation when oil prices are low, it would not be right to get listed.
OVl is currently 100 per cent owned by the ONGC. Recently the parent firm turned down a request from the Department of Disinvestment (DoD) to get the company listed saying low oil prices do not offer favourable valuations.
“I don't think this is the ideal time to list an oil exploration company. low oil prices are not ideal time for listing,” Verma said. The company's portfolio predominantly consists of exploration assets and a few producing properties. “Markets typically do not fully value exploration assets and all our exploration assets will not get true valuations,” he added.
Verma informed that the company does not need funds and has been raising loans from the parent ONGC as well as the market to meet cost of acquisitions and development of assets. OVl has rs 6,614 crore loan from ONGC and another rs29,000 crore from the market. The rs5,000 crore ONGC loan is being converted into equity.
listing will lead to certain other stipulations including change of ownership. “Currently we are seamlessly integrated with ONGC and all our requirements of funds, technology and manpower are fully met from ONGC. listing will change that,” the OVl Chairman explained.