The company is of the view that with the oil PSUs accounting for half the equity, the balance will now be earmarked for financial/strategic investors. According to sources, the Unit Trust of India is also exploring the option of picking up 10 per cent in Petronet India. A final decision is expected to be made during the next few weeks. When this happens, only 10 per cent of the total equity component will need to be sewn up which "should not pose too much of a problem."

IDBI was equally keen on picking up a 10 per cent stake inPetronet India. However, the basic idea of the joint venture was to rope in non-government companies as 50 per cent of the equity is already held by public-sector oil units. IDBI's participation would have resulted in Petronet becoming government-controlled, which was not the objective in the first place.Sources say companies like Larsen & Toubro (L&T) were also keen on taking a stake. However, the present thinking in Petronet is that financial investors should be given priority as equity partners. L&T may now consider picking up a nominal equity in the company's pipeline projects, which are scheduled to be commissioned from late-1999 onwards. Petronet India was formed as a financial holding company under a directive of the government of India with the express objective of developing a pipeline infrastructure in the country through its joint-venture companies or subsidiaries and providing pipeline access on a common carrier principle.

The equity share-holding of the oil companies has been restricted to 50per cent and the balance is to be offered to financial companies or companies with the restriction that contribution from an individual entity would not exceed 10 per cent.

Similarly, in the joint venture companies, the holding company (Petronet india) and operating oil company would hold a minimum of 26 per cent each in the equity while the balance would be offered to financial institutions and public. Petronet india and the joint venture companies are to be structured as viable, independent commercial entities, which would be project-financed on a stand-alone basis on the strength of their cash flows.

Various pipeline networks have been identified of which three will be given priority initially. These are the Vadinar-Kandla, Cochin-Karur and Mangalore-Bangalore projects proposed to be constructed individually by Petronet-VK Ltd, Petronet-CCK Ltd and Petronet-MHB Ltd. The pipelines are tentatively proposed to be financed at a debt, equity ratio of 3:1. The debt funding is expected to be largely tied upin the form of rupee term loans from financial institutions and banks.

Petronet has already appointed ICICI and its investment banking arm, I-Sec, as financial advisors for the three projects involving an investment of around Rs 1,500 crore. The two will suggest the optimal method of raising resources through a cost-effective and innovative package.

There are six other pipeline projects planned by Petronet for which detailed feasibility reports (DFRs) are already under way for four. The total investment for these projects is expected to be well over Rs 2,000 crore. DFRs are being prepared for pipelines connecting Bina-Jhansi-Kanpur-Lucknow; Chennai-Tiruchi-Madurai; Koyali-Ratlam; and Paradip-Jamshedpur-Ranchi.The fifth pipeline under consideration by the board is an exhaustive network linking Numaligarh, Jorhat, Guwahati, Bongaigaon, New Jalpaiguri and Barauni. The sixth, which is also being examined by the board, will stretch from Bhatinda to Udhampur with links at Jalandhar, Pathankot and Jammu.