Millennium Post

No demand from Govt to reconsider OVL listing: ONGC

New Delhi: State-owned Oil and Natural Gas Corp (ONGC) Wednesday said the government has not yet asked it to reconsider listing its overseas arm ONGC Videsh Ltd on bourses.

The board of ONGC had on December 21 considered a government demand to list its profitable overseas investment arm but opined that it was not the right to go for an initial public offering.

ONGC Chairman and Managing Director Shashi Shanker said the company has communicated its views on the listing of OVL to the government.

After that "we have not received any request to reconsider (listing of OVL)", he told reporters here.

The company will reconsider it if and when such a request is made, he said.

Sources said the company board on December 21 deliberated on the demand from the Department of Investment and Public Asset Management (DIPAM) for the listing of OVL but felt that the market conditions are not right for an oil and gas exploration and production company to list.

Also, there were several complexities involved in getting the firm listed.

OVL, they said, has assets in countries like Venezuela, Iran, and Sudan, which are exposed to some or other Western sanctions.

These assets will have to be first separated from the company. While this may not be a difficult task, it would involve issues of capital gains and tax thereon, they said.

Also, OVL is heavily under debt and such a move would require taking approval of all the lenders -- yet another tedious job.

A third of its $28.45 billion (Rs 1.51 lakh crore) investment in 41 projects in 20 countries has been financed by loans.

More importantly, OVL has been only in acquisition mode till now and has not yet reached an economic model where it can stand on its own feet. The company is dependent on its parent for even guarantees for taking loans.

OVL has great assets and it would reach that economic model once couple of its assets like the giant gas field in Mozambique starts production, they said.

OVL projects are in the development stage and an IPO will get the best value when these projects are monetised, they said.

OVL's giant gas field in Mozambique will start production sometime in 2022 when two LNG trains of 12 million tonnes per annum capacity are set up and gas exported in cryogenic ships.

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