Oil and Natural Gas Corporation (ONGC) is set to acquire a super-navratna status when it comes to forging joint ventures (JVs) for mega projects. The government is considering to waive the Rs 1,000-crore ceiling of equity investment for the public sector bluechip company.
This will help the oil giant to have larger financial autonomy and flexibility in acquisitions and takeovers. The company has had to lose out on some occasions as it was not armed with the required financial powers.
"The government is considering a proposal to waive the ceiling of Rs 1,000 crore for equity investment similar to National Thermal Power Corporation (NTPC)," an official said. In November 2006, the Cabinet Committee on Economic Affairs (CCEA) had removed the ceiling of Rs 1,000 crore for equity investments by NTPC in establishing JVs and wholly-owned subsidiaries in India or abroad for the purpose of participating in the bidding of ultra mega projects.
While waiving the investment limit, CCEA had subjected it to the ceiling of 15% of NTPC's networth in one project and the overall ceiling of 30% of networth in all such projects. It is understood that ONGC may also be subjected to the conditions as applicable in NTPC's case with some change. The networth of the company in FY07 is Rs 61,410 crore, up 14.6% from Rs 53,593 crore in FY-06.
It is expected that the petroleum ministry may soon make a formal request to the CCEA to grant a special dispensation to ONGC for investing in mega projects. The ministry for heavy industry and public enterprises (HI&PE) has, in principle, agreed to the proposal. "In a recent inter-ministerial committee meeting, reviewing the navratna status of ONGC, HI&PE's secretary expressed his agreement to the proposal," an official said.
It is understood that with enhanced investment status, ONGC wants to equip itself for undertaking major petrochemical and refining projects besides expanding its oil exploration and production (E&P) business in the future. It is also aggressively pursuing acquisition of oil and gas assets abroad. Its foreign investment arm, ONGC Videsh (OVL) has 26 E&P projects in 15 countries.
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Source: ET
This will help the oil giant to have larger financial autonomy and flexibility in acquisitions and takeovers. The company has had to lose out on some occasions as it was not armed with the required financial powers.
"The government is considering a proposal to waive the ceiling of Rs 1,000 crore for equity investment similar to National Thermal Power Corporation (NTPC)," an official said. In November 2006, the Cabinet Committee on Economic Affairs (CCEA) had removed the ceiling of Rs 1,000 crore for equity investments by NTPC in establishing JVs and wholly-owned subsidiaries in India or abroad for the purpose of participating in the bidding of ultra mega projects.
While waiving the investment limit, CCEA had subjected it to the ceiling of 15% of NTPC's networth in one project and the overall ceiling of 30% of networth in all such projects. It is understood that ONGC may also be subjected to the conditions as applicable in NTPC's case with some change. The networth of the company in FY07 is Rs 61,410 crore, up 14.6% from Rs 53,593 crore in FY-06.
It is expected that the petroleum ministry may soon make a formal request to the CCEA to grant a special dispensation to ONGC for investing in mega projects. The ministry for heavy industry and public enterprises (HI&PE) has, in principle, agreed to the proposal. "In a recent inter-ministerial committee meeting, reviewing the navratna status of ONGC, HI&PE's secretary expressed his agreement to the proposal," an official said.
It is understood that with enhanced investment status, ONGC wants to equip itself for undertaking major petrochemical and refining projects besides expanding its oil exploration and production (E&P) business in the future. It is also aggressively pursuing acquisition of oil and gas assets abroad. Its foreign investment arm, ONGC Videsh (OVL) has 26 E&P projects in 15 countries.
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Source: ET
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