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IBP merger by December: IOC

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Mr M.S. Ramachandran (right), Chairman, Indian Oil, with Mr P. Sugavanam, Director, at the company's AGM held in Mumbai on Friday. - Paul Noronha

Mumbai , Sept. 24

INDIAN Oil Corporation will complete the merger of subsidiary IBP Ltd with itself before December.

"Investment bankers are finalising the swap ratio for the merger which will be adopted by the boards of the two companies," Mr M.S. Ramachandran, IOC Chairman, said at the annual general meeting here on Friday.

J M Morgan Stanley and HSBC have been appointed the advisors for the merger.

Mr Ramachandran said IBP would be retained as a separate division and would continue selling products under its own brand name. However, IBP being an oil retailing company has suffered because of the spike in international crude prices.

"IBP does not have the buffer of refining margins and sells products at a lower-than-cost price. As a result, it posted a Rs 8 crore loss in the first quarter. And frankly, the situation does not look good for the entire year," he said.

The company approached the National Iranian Oil Company (NIOC) and the Iranian Government to acquire consent for a possible merger of Chennai Petroleum Corporation Ltd with itself. But IOC could not get a nod from NIOC, its partner in CPCL, for the merger.

Mr Ramachandran said IOC has requested the Union Government to make the exploration and production companies ONGC and GAIL bear 50 per cent of the burden of under-recoveries from LPG and kerosene sales. The oil industry lost a net Rs 2,352 crore last year on controlled prices of these subsidised fuels.

Mr Ramachandran said the company lost close to Rs 1,300 crore because of under-recoveries in LPG and kerosene in the first quarter this fiscal.

IOC has seen refining margins jump to $8 per barrel during the current quarter because of rising global crude oil prices.

The refining margins have been gradually moving up from $3-$4 per bbl ever since the spurt in oil prices worldwide since the last quarter of 2003-04, he said.

Bid to acquire Indonesian co

IOC said it has completed the due diligence for acquiring the Indonesian exploration and production company Medco.

"September 27 is the date for submitting bids for the acquisition," the IOC Chairman Mr Ramachandran told reporters on the sidelines of IOC's annual general meeting.

Medco is Indonesia's biggest independent exploration and production company owned by Thailand's PTT Exploration and Production PCL and Credit Suisse First Boston.

The company had proven reserves of 150 billion cubic feet of gas and 114 million barrels of oil at the end of 2003.

Its market capitalisation is around $500 million, said Mr Ramachandran said.

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