New Delhi: State-owned ONGC is mulling buying majority stake in GSPC’s Krishna-Godavari basin gas block, which will help prevent the Gujarat government firm’s Rs 19,500 crore loan from turning into an NPA.
Since the BJP-led government took power at the Centre, Gujarat State Petroleum Corp Ltd (GSPC) is seeking to sell a majority stake in its KG-OSN-2001/3 (Deendayal) block in the Bay of Bengal to ONGC, sources said.
GSPC was to begin gas production from the block in 2013 but after spending $3.6 billion it was found that gas reserves are one-tenth of the 20 trillion cubic feet claimed in 2005 and that too is technically difficult to produce.
In the process, it has amassed a debt of Rs 19,576 crore, on which interest cost was Rs 1,804.06 crore in 2014-15, according to the CAG. And against this its revenue was Rs 152.51 crore in 2014-15.
Sources said GSPC has been doing trial production of a very small volume of gas from August 4, 2014 and has not yet reached commercial production and in absence of revenue commensurate with the debt servicing obligations it risks becoming a defaulter.
ONGC has offered to sell 50 per cent stake to bail it out of the situation, they said. Money from ONGC can repay a part of the debt and the remaining would become a joint liability of the two firms. Sources said GSPC also wants ONGC to pay a fee for using its under-sea infrastructure.
ONGC has gas discoveries in a neighbouring block and GSPC wants gas from those to be routed through its Deendayal block infrastructure for onward transportation to the shore. But ONGC feels it was not technically feasible as its KG-D5 gas cannot be mixed with GSPC’s gas which has high levels of sulphur and carbon dioxide content.
