ONGC, IOC may set up 3 power projects

MUMBAI, APRIL 21: Oil and Natural Gas Corporation (ONGC) and Indian Oil Corporation (IOC) are to jointly set up three power projects tota...

MUMBAI, APRIL 21: Oil and Natural Gas Corporation (ONGC) and Indian Oil Corporation (IOC) are to jointly set up three power projects totalling 1,200 mw with an aggregate cost of Rs 4,700 crore, as per the strategic alliance between the two oil behemoths.

The three ventures are the 550 mw refinery residue-fuelled project at Sawli in Gujarat, the 350 mw refinery residue-based project at Panipat and the 330 mw naphtha-fired project at Hazira, also in Gujarat, top ONGC sources said.

All the three projects would be maintained as non-governmental enterprises by keeping the combined holding of IOC and ONGC in each at 50 per cent.

The remaining equity portion is to be given to strategic foreign partners as well as financial institutions and private investors, the sources said.

All the three projects would have a debt equity profile of 70:30, they said adding the promoters are currently preparing the detailed feasibility reports on the projects.

The 1,600 crore Panipat power project would have IOC as theoriginator’, holding 26 per cent of the equity. ONGC would keep a 24 per cent stake.

National Thermal Power Corporation (NTPC) has also been offered a 12 per cent stake in the project, which if accepted, would be subtracted from ONGC’s 24 per cent, reducing the ONGC stake in the venture to 12 per cent. NTPC is yet to respond to the issue, they said.

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The project has Marubeni Corporation of Japan as the foreign partner, with a 26 per cent share in the venture, the sources said adding that Marubeni has offered to bring in its own partners for the remaining 24 per cent equity.

In case this does not happen, the 24 per cent would be offered to the institutions, the sources said. The project would use the residue from IOC’s Panipat refinery as fuel. The Rs 1,100 crore Hazira project would have ONGC holding of 26 per cent and IOC of 24 per cent. NTPC has been offered 12 per cent in this venture as well. If accepted, this would reduce IOC’s stake to 12 per cent, the sources said.

There is no foreign partnerin the Hazira project, they said adding that the whole of the remaining 50 per cent equity would be offered to public institutions.

The project would run on Naphtha, which would be procured from ONGC’s Hazira gas processing complex. The Rs 2,000 crore Sawli project would have the combined holding of IOC and ONGC at 50 per cent and Mitsubishi Corporation of Japan as the foreign partner with 26 per cent equity.

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The project would use as fuel the residual oil from IOC’s Koyali refinery having a capacity of 9.5 million tonnes per annum (MTPA). Mitsubishi has also offered to bring in their partners to pick up the remaining 24 per cent in the project, the sources added.