MoF asks ONGC to get PIB okay for MRPL deal

MUMBAI: The ministry of finance has thrown the rule book at the Oil and Natural Gas Commission (ONGC) on the take-over of the 37.5% Aditya Birla stake in MRPL (Mangalore Refineries and Petrochemicals), insisting that the proposal be whetted by the public investment board (PIB).
The process is likely to delay ONGC’s downstream foray by a couple of months. This is the first time that the PIB, which normally approves public sector investment proposals before they are implemented, will analyse the viability investment in a project that has already been appraised and in existence for over five years.
The issue of whether a PIB clearance is needed for an existing project, promoted by a public sector company, was being debated for the past three months.
While the ministry of petroleum and natural gas and the ONGC tried hard to give the PIB a go-by, the ministry of finance stuck to its guns on the clearance being needed. This, inspite of the financial institutions, lead by ICICI and IDBI, writing to the ministry that they may be required to go to debt-recovery tribunals (DRTs) if MRPL’s financial restructuring is delayed. ``The consortium of banks has sunk in Rs 5,400 crore in the project and is anxious to see it revived,’’ said an oil company source.
Public sector companies have to approach the PIB for investments over Rs 100 crore.
However, Navratna company boards have been given the authority to clear investments below Rs 200 crore or 5% of their net worth.
ONGC has set the ball rolling by applying for the initial clearances to PIB. A clearance can normally take three to six months, but the MRPL case is simpler and is likely to take lesser time, a source said.