New Delhi: The Cabinet Committee on Economic Affairs (CCEA) on Tuesday approved ONGC converting its Rs 5,000 crore loan to subsidiary ONGC Videsh Ltd, into equity.
Oil and Natural Gas Corp (ONGC) had extended a loan of Rs 6,000 crore to its overseas investment arm to meet its acquisitions requirements. Of this, Rs 5,000 crore is being converted into equity.
With this, the equity base of OVL will rise to Rs 15,000 crore. All the loan ONGC had given to OVL was at zero interest.
"The CCEA, chaired by Prime Minister Narendra Modi, has given its approval for investment of Rs 5,000 crore by ONGC into the equity share capital of ONGC Videsh by conversion of existing loan of equivalent amount into equity," an official release said.
The approved investment will strengthen the capital base of ONGC Videsh. It will enhance the ability of ONGC to undertake overseas Exploration and Production (E&P) business, thereby improving the energy security of the country, it added.
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