Financial Daily from THE HINDU group of publications
Thursday, Apr 21, 2005
Financial Daily from THE HINDU group of publications Thursday, Apr 21, 2005 |
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Corporate
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Outlook Nagarjuna Oil hopes for financial closure by Sept N. Ramakrishnan
Chennai , April 20 NAGARJUNA Oil Corporation Ltd, whose 6-million-tonnes-a-year refinery project at Cuddalore in Tamil Nadu is seeing some progress after a long time, hopes to finalise its equity holding structure by June end and achieve financial closure by September. Work on the refinery, which was to have begun production in 2002, is expected to start, thereafter, and the refinery scheduled to go on stream in 24-30 months after that. The company has tied up equity partners for 74 per cent of the Rs 1,160-crore equity and has a commitment from Oman Oil Corporation for the balance 26 per cent. Meanwhile, a public sector oil company is doing due diligence for an equity stake in the project, according to reliable sources. The Rs 3,480-crore project has been revived thanks to the efforts of the Tamil Nadu Government, the sources say. The State Government has worked out an attractive set of incentives that conform to the new industrial policy released by it in 2003. This, along with the decision of Tamil Nadu Industrial Development Corporation (TIDCO) to increase its equity exposure to 5 per cent from the earlier 2 per cent enabled the project to be revived, according to sources. According to the sources, Nagarjuna Oil Corporation has got firm equity commitment from Indian Oiltanking Ltd, a joint venture between Indian Oil Corporation and Oiltanking GmbH of Germany, which will pick up a 11 per cent stake. The Nagarjuna group, as the main promoters, will hold 51 per cent and Krupp Uhde of Germany, the technical collaborator, 7 per cent. According to the sources, Nagarjuna Oil Corporation has tied up for marketing with IBP, Bharat Petroleum Corporation and ONGC, through MRPL. Debt for the project will come from KfW, a German development bank, and a host of Indian financial institutions and banks led by IDBI. The sources said that there would not be any substantial increase in project cost as the company was trying to improve the refinery configuration. The company was looking into the possibility of getting Indian Oiltanking Ltd to lay the marine infrastructure on a build-operate-transfer basis. This meant that the Rs 500 crore that would be required to create the marine infrastructure would be on the books of Indian Oil Tanking, the sources said. They said that the company had spent Rs 930 crore as of March 31 on equipment, technical fees, engineering and interest during construction. A part of the equipment from a Mobil plant in Germany had arrived at Cuddalore and the remaining was waiting at an European port to be shipped to India. Initially, the company is looking at exporting petrol.
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