ONGC eyes Rs 1 lakh cr capex
ONGC draws up an ambitious plan for capital expenditure of Rs 1,21,318 crore in the Eleventh Plan, reports Deepak Joshi.business Updated: Jun 26, 2007 00:07 IST
The Oil and Natural Gas Corporation (ONGC) has drawn up an ambitious plan for capital expenditure of Rs 1,21,318 crore in the Eleventh Plan. Of this, Rs 75,380 crore will be invested in the domestic sector, while most of the remaining funds will be utilised to acquire oil and gas properties overseas.
“ONGC Videsh Ltd's (OVL) outlay for the Plan is Rs 45,000 crore, compared to Rs 14,000 crore in the last Plan. It implies OVL making investments of $2 billion annually in the Eleventh Plan for buying oil equity abroad,” OVL managing director RS Butola said. Group company Mangalore Refinery and Petrochemical Ltd (MRPL) will invest Rs 8,316 crore compared to Rs 765 crore in the previous plan.
ONG chairman RS Sharma said there were no plans to list OVL in the stock market. “The current requirements of OVL can be met through internal accruals and notional borrowings. There is no point in listing on the market to keep money in the bank,” he stated.
He also ruled out merger of ONGC and its subsidiary MRPL. “There was a plan for merger at the time of acquiring MRPL and it had an upside in terms of tax management. However, there is no plan for merger now and there are no immediate benefits accruing to the company,” ONGC chairman added.
Sharma said the company had no plans to set up a refinery in Rajasthan and a decision on a pipeline to transport Cairn India's crude was likely this week. “The economics to set up a refinery was turning out to be worse so now the administrative ministry says that only a pipeline will come up and decision would be taken on June 27. It will be decided whether a pipeline will be laid by ONGC and Cairn or a special purpose vehicle or a third party,” he stated
Regarding the setting up of a refinery at Kakinada, he said a 7.5 million tones per annum (MTPA)was not found to be viable. “We have commissioned a study on raising the size to 15 MTPA and it would be available for assessment by next month.”
Announcing the financial results for 2006-07, Sharma said the company net profit increased eight per cent to Rs 15,643 crore, despite a subsidy payout of Rs 17,024 crore during the year. The company had posted a net profit of Rs 14,431 crore in 2005-06. Turnover in FY'07 increased by 18 per cent to Rs 56,904 crore and the company declared a dividend of 310 per cent to its shareholders.
“ONGC's gross realisation in crude sales was $66 a barrel, but company had to shell out a discount of $22 a barrel to refiners toward subsidised fuel sales. The net realisation for ONGC in 2006-07 was $44 per barrel,” Sharma said.
ONGC chairman said Re 1 appreciation against dollar impacted on the company to the extent of Rs 50 crore. “Taking into account, the gradual average appreciation by Rs 3 in the financial year, ONGC has taken a hit of Rs 2,700 crore in the financial year,” he added.
The company has recommended a dividend of 310 per cent on expanded capital after bonus issue of 1:2 amounting to Rs 6631 crore plus dividend distribution tax of Rs 1013 crore.
First Published: Jun 25, 2007 23:55 IST