The Hindu Business Line : IOC open to buying Bengal's stake in Haldia Petrochem

INDIAN Oil Corporation Ltd (IOC) is open to the idea of acquiring the West Bengal Government's stake — aggregating a little over 30 per cent of the company's equity — in Haldia Petrochemicals Ltd provided it is offered to the oil major "at the right price".

IOC already holds around 7.5 per cent of the equity stake in Haldia Petrochemicals. Towards this end, it has recently paid Rs 150 crore to the West Bengal Government.

The Chairman of IOC, Mr Sarthak Behuria, told newspersons that the company had "not invested in Haldia Petrochemicals as a portfolio investor". The idea was to manage the company with a view to facilitating its growth in the long-term. It may be mentioned that the principal promoter of Haldia Petrochemicals, Mr Purnendu Chatterjee of The Chatterjee Group, has opposed the grant of equity stake in the company to IOC.

Mr Behuria said the ultimate idea behind IOC's investment in Haldia Petrochemicals was to increase its equity stake further.

Concern over crude prices

Mr Behuria made a strong case for a rise in the domestic prices of petroleum products to curtail losses that oil companies were incurring on account of under-recoveries.

On an annualised basis, the total loss has been pegged at Rs 40,000 crore.

According to Mr Behuria, the Government is seized of the matter and has recognised the fact that oil marketing companies could not alone continue to bear the burden of rising crude prices.

He said the burden of rising oil prices had to be shared by oil producing companies, oil marketing companies, consumers and all stakeholders. He said the non-revision of the prices of auto fuel commensurate with high crude oil prices had severely affected the bottomline of oil companies. Similarly, the companies had also been hit hard by the non-revision of the retail selling prices of kerosene and LPG.

For example, in 2004-05, IBP Co alone had to put up with under-recoveries of Rs 352 crore in respect of kerosene and LPG and Rs 211 crore on petrol and diesel, aggregating a total of Rs 563 crore.

On IOC, Mr Behuria said even though the price revision was delayed and crude prices were skyrocketing, his hope was that the company would manage to cover a substantial portion of the loss incurred during the quarter through income from dividends, and so on.

He said: "We have generated some resources, including dividends from our group subsidiaries, which may help us to book profits if the price hike comes. Its all about financial engineering as you can understand."

He suggested the creation of a `Stabilisation Fund' that would include the contribution of upstream companies towards mitigating the impact of the under-recoveries of oil marketing companies.

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