The oil ministry is investigating OVL & OIL’s deals in which they paid a total of $5,159 million in 2014 for acquiring 20 pc stake in Mozambique gas field. OVL bought 16 pc – 10 pc from a subsidiary of Videocon, which originally bought the stake at $75 million in 2008, and 6 pc from Anadarko, a US based oil & gas operating company. Another Indian PSU, Bharat PetroResources Ltd (BPRL), a subsidiary of BPCL, also bought 10 pc stake from Anadarko for $75 million in 2008. Mitsui, a Japanese company, also bought 20 pc in 2008 for $141 million. Thus, the enterprise value of the project, that was awarded in Dec 2006, was $705 million in 2008 (based on Mitsui’s acquisition cost).
In response to a question raised in the Rajya Sabha, the oil & gas minister Dharmendra Pradhan on February 8, 2017 had stated that BRPL has so far invested a total of $644 million in the Mozambique gas field. Therefore, in 2013/2014, BRPL’s investments must have been much lower than $644 million. Let us assume that around 2013/2014, BRPL’s total investment was $500 million for 10 pc stake.
Compared to this ($500 million investment by BRPL), OVL/OIL purchase of 10 pc stake at $2,519 million in January 2014 from Videocon, and 10 pc in February 2014 from Anadarko at $2,640 million, was nothing but over-valuation of assets.
That is why, after its stake sale to OVL, Anadarko had stated, “Anadarko sold a 10 pc working interest in Offshore Area 1 in Mozambique for $2.64 billion, recognizing a gain of $1.5 billion.”
On the other hand, Videocon had initially paid $75 million for the 10 pc stake, which it sold to OVL & OIL for $2,519 million. Thus, its gain from the deal is also as high as $2,019 million. For details read our cover story.
Our lead story is about how, as soon as the final phase to the Panchayat Polls got over on February 21, and results started showing that BJP was gaining ground, the Odisha government held a cabinet meeting the next day (February 22) and decided to withdraw tax sops. It was a big jolt for IOCL. Some other time, it would have passed off as the state’s decision to protect its financial interest. But coming within a day of not-so-impressive performance by the ruling party in the panchayat polls, it gave an impression that the ruling BJD was trying to arm-twist IOCL for political reasons.
