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ONGC to raise loan to fund Imperial buy

NEW DELHI: Pressing ahead to clinch the crucial deal, State-run Oil and Natural Gas Corporation (ONGC) has indicated that it could opt for a bridge loan of around $1 billion to partly fund the acquisition of U.K.-based Imperial Energy for which its overseas arm ONGC Videsh Limited (OVL) has made a bid of $2.58 billion.

ONGC Chairman and Managing Director, R. S. Sharma said that the company would like to take a loan to bring more credibility to the entire transaction. Loan could be a mix of overseas and local borrowings, he added.

OVL hopes to win approval from Moscow to go ahead with the purchase of Imperial Energy. ONGC will lend the remaining $1.58 billion to OVL at 6 per cent interest rate. Mr. Sharma said ONGC might sell its stake in Indian Oil Corporation, and Gas Authority of India Limited (GAIL) to fund the acquisition. “We have all options before us. Funding is not an issue,” he said.

ONGC has 8.83 per cent stake in IOC and 4.83 per cent in GAIL. The deal is contingent upon Moscow’s approval as Imperial has assets in the Tomsk region of Western Siberia.

A committee headed by Prime Minister, Vladmir Putin, which screens foreign investments in strategic sectors, is to decide on OVL’s acquisition of Imperial. It is learnt that efforts are already on through diplomatic channels to seek Russia’s approval and involvement in the deal.

Union Petroleum and Natural Gas Minister Murli Deora had already taken up the matter with Russian President, Dmitry Medvedev who had promised to support the deal.

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