Sunday, July 24 2005 12:45 Hrs (IST) - World Time -

New Delhi: Prime Minister Manmohan Singh has cleared Oil and Natural Gas Corp's Rs 21,000 crore investment in LNG (Liquefied Natural Gas), power and petrochemicals projects at Mangalore.

A communique from Prime Minister's Office, dated July 15 (Friday), said: "After due consideration of all aspects of the matter, the Prime Minister has approved the various projects at Mangalore under the MoU (Memorandum of Understanding) between ONGC and Karnataka.

ONGC plans to set up Rs 7,475 crore petrochemical and aromatic plant, Rs 8594 crore LNG based power project, Rs 3590 crore C2/C3 recovery plant and LNG terminal and Rs 945 crore gas transportation pipelines.

Officials said the state-owned firm had last year signed a memorandum of understanding (MoU) with Karnataka Government for projects worth Rs 25,000 crore but could not proceed due to objections from Petroleum Ministry.

Petroleum Ministry on May 19, a day after Prime Minister reviewed ONGC's plans, contended that ONGC made the investment plan "without approval of the Government and company board."

Officials said the order from Prime Minister's Office said Mangalore Refinery and Petrochemicals Ltd, a subsidiary of ONGC, would be the implementing agency for the total project while ONGC would provide finances and guarantees. "LNG imports will be contracted by ONGC," it said.

Prime Minister also approved ONGC as co-promoter of the Mangalore Special Economic Zone with the state government.

He allowed ONGC to float wholly owned subsidiaries for petrochemicals and power project and "float equity in market and/or to non-competing technology partners, retailing minimum 26 per cent and exclusive management control."

The approach suggested by Prime Minister would help execute projects off-ONGC balance sheet by raising funds in the capital market. At the same time, ONGC will have the benefit of consolidation of the balance sheets, the official said.

Petroleum Ministry had wanted ONGC's subsidiary MRPL (Mangalore Refinery and Petrochemicals Ltd) to take lead role in setting up of the liquefied natural gas import and re-gasification plant and petrochemical complex, while leaving the power plant for implementation by Central power utility.

It had wanted the commitments made in the ONGC MoU with Karnataka Government to be honoured by the oil industry.