ONGC, Mittal hits financial roadblock

OMESL — set up to provide trading, shipping and terminalling services —came into being with the purchase of a Cyprus company. It is to be used as a trading arm for ONGC Mittal Energy Ltd which recently signed a pact with Nigeria on lifting rights for 32.5 million tonnes of crude oil per year, equal to India’s current annual flow.

However, OMESL has had to live off funding from Mittal group as ONGC has been taking time in contributing its share even though the joint venture agreement was signed between the two on October 11 last year. That equity will now get further delayed as Additional Secretary Anil Razdan directed the ONGC board on June 6 that “any financial outlay in this regard be committed only after specific approval of the board”.

OMESL proposes to build an export-oriented refinery in Nigeria for which the creation of a balance sheet has become important. It also requires financial backing for filing for registration as a vendor with overseas exploration firms. The 98 per cent equity in the public-private venture has been divided between state-run ONGC (51 per cent) and Mittal (49 per cent). Remaining 2 per cent is held by financial institutions.