Chennai, June 15
Indian Oil Corporation intends to enter into an agreement with Nagarjuna Oil Corporation Ltd for buying petro products from the 6-million-tonne refinery that Nagarjuna is putting up in Cuddalore, Tamil Nadu.
However, the agreement will not bind IOC into a committed offtake. The PSU oil major will have the right of first refusal Nagarjuna will have to offer its products first to IOC, Dr N.G. Kannan, IOC's Director-Marketing, told a press conference here today.
Nagarjuna Oil Corporation is putting up a 6-million-tonne refinery at a cost of Rs 4,750 crore at Cuddalore. The Tatas are taking 26 per cent stake in the company.
IOC has a memorandum of understanding with Nagarjuna. "The `intent' is now being converted into an agreement," Dr Kannan said.
Answering a question, he said that there was enough demand for IOC to take products from Nagarjuna Oil even after picking up the production of IOC's subsidiary, Chennai Petroleum Corporation Ltd.
Dr Kannan said that the IOC board had okayed a Rs 2,370-crore budget for the marketing division of IOC, of which Rs 1,100 crore would go only towards putting up more retail outlets and doing up existing outlets.
Dr Kannan said that IOC recently tied-up with the certifying agency BVQ to certify its retail outlets for quality. The company has also tied-up with Shell Global Sampling (SGS) for `third party sampling' of products from its sales points. These tie-ups are aimed at assuring the customers of the quality of the products.