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Wednesday, Aug 21, 2002

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TN pipeline financial closure likely soon

Archana Chaudhary

MUMBAI, Aug. 20

THE 520-km Chennai-Tiruchi-Madurai petroleum product pipeline project is likely to achieve financial closure in the next six to 10 weeks with Indian Oil Corporation and Petronet India Ltd settling their differences.

Work on the project, expected to cost about Rs 500 crore, had stopped after IOC said it may consider constructing the carrier by itself. The project was initially planned as a joint venture with PIL through the special purpose vehicle -- Petronet CTM Ltd. It appears that now the initial plan will stay. "Petronet will now build this pipeline. We (IOC and PIL) have not only sorted out the problems between us, but IOC has also given us a comfort letter assuring offtake through the pipeline,'' Mr K K Sinha, Managing Director, PIL told Business Line.

PIL will now approach lenders for funds on the basis of the comfort letter provided by IOC. He said the project could be completed with 24 months from the date of financial closure as most of the ground work is done.

"A lot of work, including surveys, right of way and most importantly, acquiring environmental and other clearances has already been completed. What remains is acquiring land to begin laying the carrier,'' he said.

The pipeline would deliver diesel, petrol and kerosene from Chennai Petroleum Corporation Ltd through IOC's marketing terminal at Chennai up to Asanur in Tiruchy with a tap-off-point at the company's Madurai oil installation.

The carrier will move up to two million tonnes of products in phase one and the capacity will be increased by another 0.5 million tonnes in the second phase.

PIL and IOC hold 26 per cent stake each in Petronet CTM Ltd while financial and strategic investors hold another 48 per cent.

Speaking about another Petronet project - the Mangalore-Hasan-Bangalore project, Mr Sinha said PIL expected "commissioning before December this year''.

The joint venture with Mangalore Refinery and Petrochemicals Ltd ran into problems because of power supply glitches and initial public opposition through litigation.

"Hindustan Petroleum, one of the promoters of MRPL, has also agreed to a comfort letter for this project,'' Mr Sinha said.

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