Oil India was offered 10 per cent in the project nearly two years ago and its board had given in-principle approval to pick up the stake. However, the current thinking is that the corporation should give priority to exploration activities abroad, which will assure more revenue.

Sources also indicated that the board of Oil India is awaiting the outcome of the study being conducted by the Barua committee on the possible merger of Oil India with Bongaigaon Refinery and Petrochemicals (BRPL). If this finds favour with the ministry of petroleum and natural gas, there would be no necessity for Oil India to take a stake in the Numaligarh project.

Even during the time it wasconsidering the proposal, Oil India had reservations on the capacity of the Numaligarh refinery. The top brass was of the view that three million tonnes was not adequate in an era of free pricing which is due to happen by 2002. "It would be wiser to enhance capacity to six million tonnes by the time administered pricing mechanism is removed," sources said. The revised agenda in Oil India's plans for Numaligarh will not have any bearing on the project which is progressing smoothly. There have been unconfirmed reports that a public issue is in the offing during the next six months to finalise the funding plans. With Oil India opting out of the venture, the public issue component will now be 39 per cent and not 29 per cent as envisaged earlier. Interestingly, at one point, the Oil and Natural Gas Corporation was also tipped to pick up a stake of around 12 per cent in the Numaligarh refinery. However, ONGC changed its mind and decided to confine its interest in refineries to the Bharat Oman project in Bina,Madhya Pradesh, promoted by BPCL and the Oman Oil Company. The petroleum ministry was keen that ONGC take a stake so that its presence in the northeast would be enhanced. The ONGC board was, however, of the opinion that taking a stake in the six million tonne Bina refinery made more strategic sense.

According to the latest annual report of the petroleum ministry, the Numaligarh project would be supported by a crude oil pipeline being implemented by Oil India at a cost of Rs 30 crore. The marketing terminal would be implemented by Numaligarh refinery itself at a cost of around Rs 225 crore. The products of the refinery would be evacuated by the railways. The ministry report also states that the authorised capital of the Numaligarh refinery is Rs 1,000 crore while the paid up capital as on December 31, 1996 was Rs 207 crore. During 1996-97, the promoters contributed Rs 121 crore as equity.

IBP may reduce equity

There have been reports circulating in New Delhi that IBP could reduce its stake in theNumaligarh refinery from the present 19 per cent to 13 per cent. The company is apparently working out a proposal which would involve another oil PSU also holding 13 per cent so that there would be a combined 26 per cent holding along with BPCL's 32 per cent. While IBP officials were unavailable for comment on the issue, sources said the company has little to gain from a 19 per cent stake "which is neither here nor there." However, it is unlikely if any other oil PSU, apart from ONGC and Oil India, would be keen on participating in the project. IBP has, so far, contributed Rs 68 crore as its equity for the project which translates into a stake of around nine per cent. Its 19 per cent commitment works out to Rs 174 crore and the main question remains: does IBP have the resources to cough up the balance?