Financial Daily from THE HINDU group of publications
Wednesday, Jun 14, 2006
Financial Daily from THE HINDU group of publications Wednesday, Jun 14, 2006 |
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Petroleum Corporate - Mergers & Acquisitions Tata Sons to pick 26 pc in Nagarjuna refinery N. Ramakrishnan
Equity partner Tata group expected to sign a definitive agreement shortly IDBI syndicating the loans, including the foreign currency debt TIDCO to convince the State Government to provide financial incentives
Chennai , June 13 Tata Sons is all set to pick a 26 per cent stake in the Nagarjuna refinery at Cuddalore in Tamil Nadu. The Tatas will spend close to Rs 350 crore for its stake in the Rs 1,370 crore equity of the project. According to reliable sources in the Tata group, the company has signed an agreement to pick up the stake and a definitive agreement is expected to be signed shortly. With this, Nagarjuna Oil Corporation Ltd, which is putting up a six million tonnes a year refinery, is all set to achieve financial closure shortly. IDBI has sanctioned its part of the Rs 3,380 crore debt for the project and is also syndicating the loans, including the foreign currency debt, according to reliable sources.
Equity Partner
With the Tatas coming in as an equity partner, the project is expected to get a boost and proceed smoothly. It was originally scheduled to go on stream in 2002, but the date was later put off to 2005. The Nagarjuna group, as main promoters, will hold 51 per cent equity in the project followed by Tamil Nadu Industrial Development Corporation (TIDCO), a State Government undertaking, 5 per cent; Krupp Uhde, the technical collaborator, 7 per cent; and Sun Itera, a joint venture between the Itera group, a leading producer and trader of natural gas in the CIS countries, Sun Energy of India, 10 per cent and IDBI 1 per cent. According to the sources, financial closure is expected by next month and work on the plant is expected to begin from August. The refinery is scheduled to go on stream 24 to 30 months after that. The sources said the promoters had decided to integrate the second phase of the project — when the refinery would be able to produce petrol and diesel to meet Euro 4 emission norms — with the first phase itself, because of which the project cost now would be Rs 4,750 crore. Earlier, the refinery was to produce fuels to meet Euro 3 norms and improved later to meet the next stage emission norms. This component of the project, which included a large capacity fluidised catalytic converter, alone would cost Rs 1,250 crore.
Financial incentives
They said that the company had spent Rs 930 crore as of March 31, 2005 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 a European port to be shipped to India. TIDCO, which has been actively pursuing this project, is expected to convince the State Government to provide financial incentives as per the industry policy in vogue.
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